Russian oil product exports plunge 33% as refinery strikes bite

Russia's seaborne oil product exports fell a third in July, tightening a global diesel market already short on supply.

Russian seaborne oil product exports fell 33 percent month-on-month in July to about 3.9 million metric tons, the steepest drop on record, as Ukrainian strikes on refineries and a diesel export ban curbed fuel production, according to market sources and LSEG data.

"Exceptionally strong diesel margins, following the ban on Russian diesel exports, incentivised exports from India, with cargoes headed to regions previously supplied by West Asia and Russia to fill the supply void," said Nikhil Dubey, lead analyst for refining at Kpler.

The collapse extends a slide that began in June, when Russian oil product exports fell 13.1 percent to about 1.6 million barrels per day, the lowest on record, per the KSE Institute's Russian Oil Tracker. Refinery runs dropped to 3.8 million barrels per day, 1.6 million below a year earlier, forcing Moscow to redirect crude it could no longer process. Average Urals FOB prices fell about $24 to $61 a barrel, while ESPO FOB Kozmino declined roughly $22 to $73.

The squeeze is rippling through global markets. Goldman Sachs estimates global diesel exports fell 35 percent in July, or about 2.6 million barrels per day, while Russia extended restrictions on gasoline and diesel exports through January 31, 2027. India, which imported a record 2.8 million barrels per day of Russian crude in July, lifted refined fuel exports to a one-year high of 1.53 million barrels per day, Kpler data show.

Export ban puts a third of volumes at risk

Russia banned diesel and gasoil exports in July after repeated Ukrainian drone attacks knocked refineries offline, triggering fuel shortages and price spikes. The measure potentially puts up to 36 percent of total oil product export volumes at risk, the KSE Institute said. Between January 2025 and June 2026, Russia shipped these products to 52 countries, with the eight largest buyers accounting for 80 percent of exports. Moscow had previously exported a steady 900,000 to 1 million barrels of diesel and gasoil per day; in June, exports fell to about 580,000 barrels per day.

Turkey is the market most dependent on Russian diesel and gasoil, with Russia supplying 87 percent of its imports of those products. Russia's share stood at 76 percent in Tunisia, 63 percent in Brazil, 61 percent in Ghana and 54 percent in Senegal, per the KSE Institute.

India steps into the supply void

The disruptions have reshaped global trade flows. India's refined fuel exports climbed to 1.53 million barrels per day in July, about 27 percent above the average monthly volume over the previous 12 months and the highest for the month since Kpler began tracking the data in 2017. Reliance Industries accounts for nearly three-fourths of India's refined fuel exports, while Rosneft-backed Nayara Energy is the other major exporter.

The last time Russian product exports contracted this sharply, in the early months of the 2022 invasion, buyers scrambled to replace roughly 3 million barrels per day of lost supply, pushing diesel cracks to record highs. The current shortfall is smaller but arrives as Middle East supply is constrained by the U.S.-Iran conflict, leaving Europe, which relies on imports for diesel, particularly exposed.

Russia may reopen a narrow export route for producers in September, but broader restrictions now stretch into next year. Deputy Prime Minister Alexander Novak said several refineries had restarted and conditions at filling stations had improved, while acknowledging some regions, particularly in Siberia, were still struggling. Every barrel Moscow keeps home is one fewer available to buyers already competing for reduced supplies from the Gulf.

This article is for informational purposes only and does not constitute investment advice.