Russian oil exports cratered by more than half since G-7 price cap began

Breanne Deppisch

December 20, 11:13 AM December 20, 11:13 AM

Russia’s oil shipments cratered by more than half in the first full week after the G-7 oil price cap took effect, an alarming decline that could risk global supply shortages.

In the first seven days after the G-7 price cap took effect on Dec. 5, alongside a European Union sanctions package banning Russian crude, Russia's oil shipments plunged by 1.86 million barrels per day (bpd) to 1.6 million bpd — a decline of roughly 54%, according to data from Bloomberg.

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Four-week averages also plummeted by 266,000 bpd, a new low for the year.

The U.S. and other G-7 countries meant for the oil price cap to deprive Russia of revenue for its war in Ukraine but without leading it to take supply off the global market. Under the policy, buyers who purchased Russian supplies under the capped price still have access to insurance and other shipping services that otherwise would be prohibited.

The drop in Russian shipments was due in part to maintenance at a key Russian port of Primorsk that has since been completed. But traders have also faced practical limitations when dealing with the cap, including in moving crude from the Black Sea to the Mediterranean. Longer shipping distances to China and India have also driven up freight costs.

The volume of Russian crude on tankers headed for China, India, and Turkey, Russia’s three main buyers, as well as quantities on ships without a destination, also fell. According to commodity analytics firm Kpler, 50% of Russian volumes were shipped to India and 30% to China.

The decline in Russian oil exports is expected to persist through April of next year, according to Kpler analyst Victoria Grabenwoger.

The firm forecasts that trading will continue at suppressed levels, despite growing demand from India and China, as well as the emergence of new buyers, including Indonesia, Sri Lanka, Brazil, and Pakistan.