Russian Crude Exports Start To Fall And What It Means For The Oil Market

Four months after the Ukraine invasion, Russian crude exports are finally starting to fall. According to mid-month actual export data from Kpler, you can see the crude export drop to ~3.9 million b/d. Now granted, this is only mid-month data so things can still change, but this is the first glimpse of weakness in Russian crude exports.

There are very meaningful implications arising from this. For starters, we've long said that if Russia's crude exports don't fall, then the oil market is actually not seeing any "supply loss". In fact, a month after the invasion, Russian crude exports actually shot up resulting in more supplies to the market, not less.

It took a while for the losses to filter through. With the EU ban coming at the end of the year and trading houses not renewing the trading contracts with Russia, India and China are left buying all of the seaborne crude exports. Logistical issues prevent max Russian crude exports, and that's another reason why you are seeing tanker rates skyrocket. With the logistical constraints coming, even if China and India replace all of the EU, Russia will likely lose ~1+ million b/d of crude exports. This means we could see Russia's crude exports surprise to the downside by another 500k b/d or more.

And since Russia is finally showing crude export losses, OPEC+ crude export figures are also starting to meaningfully drop.