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Russian Oil Flows Dive, Hurting Putin's War Chest

Russia’s seaborne crude flows have plunged so far in September; lower export duty rates in October will be another hit to revenue

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Russia’s seaborne crude exports have fallen sharply in the first half of September, hit first by a storm in the Pacific and then by an unexplained decline in shipments from the Baltic. Flows to the big Asian buyers — China and India — aren’t offsetting a drop in volumes for Europe.

Crude shipped from Russia’s ports has fallen by almost 900,000 barrels a day in two weeks, averaging 2.54 million barrels a day in the week to Sept. 16, compared with 3.42 million in the seven days to Sept. 2. Using a four-week moving average to smooth out variability in the figures, shipments fell below 3 million barrels a day for the first time in more than five months. 

If cargoes don’t rebound, the hit to the Kremlin’s revenues from lower volumes will soon be compounded by another drop in export duty rates, which are set to fall by 15% in October. That will take the per-barrel income to its lowest since February 2021, reflecting both lower international crude prices and a widening discount for Urals against Brent crude during the mid-August to mid-September period.

The headwinds for President Vladimir Putin are strengthening just as the US is pressing buyers of Russian oil to sign up to a price cap that would see purchasers granted access to insurance and other essential services only if the price paid is below a yet-to-be-determined threshold. While key customers China, India and Turkey are unlikely to endorse the plan, the price cap may boost their bargaining power over Russia for future purchases.