russia is running out of oil storage facilities due to US pressure and sanctions

This was reported by Reuters, according to Ukrinform.

It is noted that russia's oil exports have slowed in recent months following tougher sanctions from the US and the imposition of duties on India for purchasing russian oil, as well as the EU's refusal to import LNG. The European Commission's proposal to impose a complete ban on any activity that supports the maritime export of russian crude oil will further increase pressure on Moscow.

According to the analytical company Kpler, russian oil exports by sea, which amounted to 3.8 million barrels per day (bpd) in December, fell to 3.4 million bpd in January and are around 2.8 million bpd in February. At the same time, the volume of russian oil stored on ships has risen to a record level of over 150 million barrels in recent months, and many tankers have also slowed down – both factors indicate a weakening of demand.

According to analysts, pressure on russian exports may intensify in the coming months, as India, which was the largest buyer of russian oil exported by sea last year, is preparing to limit purchases in order to reach a trade agreement with the United States.

According to Kpler, India purchased about 1.7 million bpd last year, accounting for about half of Moscow's total seaborne exports. Imports fell to around 1.1 million barrels per day in January, and although a slight recovery is expected in February, a sharp decline is forecast from March onwards. Although the three largest refineries — Indian Oil, Bharat Petroleum and Reliance Industries — have stopped buying russian oil, India's imports are unlikely to fall to zero.

This slowdown in purchases is causing a negative chain reaction in russian oil logistics. Longer voyages by the shadow fleet are delaying tankers, reducing the number of vessels available to store additional oil at sea, which in turn is forcing producers to redirect more oil to domestic storage facilities.

The size of russia's onshore storage facilities is unknown, as the government does not publish relevant data, but their capacity appears to be limited. According to Kpler's satellite monitoring of tanks, onshore oil reserves amount to about 16 million barrels, or approximately 51% of total capacity.

If necessary, russia can use part of its vast pipeline network to store oil, which, according to Kpler's estimates, could increase total above-ground capacity to around 100 million barrels.

But even this reserve may not be enough. russia produces about 9.3 million barrels of oil per day, about half of which is exported. At this rate, onshore storage facilities could quickly fill up if exports remain limited, and the only option in this case would be to cut production.

According to Rystad Energy, these logistical problems could reduce oil production in russia by 300,000 barrels per day between March and May.

Oil and gas revenues are the Kremlin's main source of income, accounting for almost a quarter of federal budget revenues. According to the Ministry of Finance, state revenues from oil and gas in January halved compared to the previous year, falling to their lowest level since July 2020 as a result of lower oil prices.

Source: Ukrinform, Reuters