Russia's crude oil exports are jumping to record levels, leading to a large accumulation of barrels at sea, as prices of the main revenue-generating commodity for Moscow slump.

During the four weeks ending June 28, average crude shipments rose to 4.13 million barrels per day, according to tanker tracking data compiled by Bloomberg. This is the highest level since Russian forces invaded Ukraine in 2022, as the country previously transported a much larger share of its oil via pipelines to Western Europe.

As a result of the export surge, the amount of Russian oil at sea has risen by about a third compared to the low recorded in mid-April, with cargoes starting to accumulate at locations near Egypt and Singapore, signaling that Moscow may be facing increasing difficulty finding buyers for all its shipments.

At the same time, the abundance of Russian shipments is helping to keep global oil supplies steady amid ongoing disruptions that are hampering flows from the Gulf. Although tankers have started transiting the Strait of Hormuz after the US and Iran signed a temporary peace agreement, transit remains limited.

Targeting of Russian oil refineries

The surge in shipments comes as Ukraine continues to target oil refineries in its neighbor, which may push Russia to divert crude that cannot be processed domestically to exports. Recent attacks by Kyiv include strikes on facilities in Ufa, Yaroslavl, and Slavyansk-na-Kubani, a key fuel supplier to the Russian-occupied Crimea. Prior to that, two strikes hit the Moscow refinery, which may remain offline until the end of the year, forcing President Vladimir Putin to acknowledge that the country is facing pressure on fuel supplies.

However, the value of Russian shipments has not kept pace with the sharp rise in volumes. The price of Moscow's main export crude has fallen in line with global benchmarks, amid hopes that the temporary peace agreement in the Middle East, which has already begun boosting flows from the Gulf, will become permanent. According to Argus Media data, the value of cargoes loaded from Baltic ports is half of what it was in early May, and the price of ESPO crude loaded from Pacific ports is also declining. This has pushed Moscow's oil revenue to its lowest level since March.

With average daily Russian shipments over the past four weeks exceeding their first-quarter level by about 780,000 barrels, the amount of its oil at sea has risen to 133 million barrels, an increase of nearly 34% from the low recorded in mid-April. Tanker tracking data shows that cargoes have started accumulating at Marsa al-Hamra in Egypt and in the Riau Archipelago east of Singapore.