A buildup of a billion barrels of oil on the world’s oceans includes a disproportionately large amount of crude from nations subject to some kind of sanctions — a sign the measures are bringing a degree of disruption to the oil trade.
Of the surge in oil on tankers since the end of August, as much as roughly 40% of the increase is barrels from Russia, Iran, Venezuela, or unclear origin, according to vessel-tracking data from Vortexa, Kpler and OilX. Even the lowest estimate, at about 20%, is a larger share of global crude production than the three nations have.
The buildup doesn’t mean the barrels will never sell, but it is a threat to the revenues of sanctioned petrostates, with further ramifications for a global oil market that’s forecast to be headed for oversupply. While the increase partly reflects higher output, it also suggests some level of difficulty discharging. There’s also been a simultaneous surge in unsanctioned supplies.
The fate of all that crude on water, affected by sanctions or not, will go a long way to shaping how oil prices move over the next few months, traders said. Caution over the latest Western measures is triggering some reshuffling of crude flows, with ripple effects for major importers like India and China, while a stretched out tanker fleet briefly sent daily shipping costs above $100,000 a day.
“Some of this increase is attributed to stricter Western sanctions, which have left Russian oil stuck on ships and unable to discharge,” Clarksons Securities analysts including Frode Morkedal wrote. “Previous buyers have purchased replacements from the Middle East and the Atlantic.”
The buildup in restricted oil is led by Russian supplies, according to a Bloomberg analysis of the data from the vessel-tracking firms.
Russian seaborne shipments have risen in recent weeks, with the country pumping more oil as it unwinds earlier production cuts alongside partners in the OPEC+ group of oil producers. It’s likely that some crude is being diverted to export terminals as a result of Ukrainian attacks on Moscow’s oil infrastructure, particularly refineries.
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An unprecedented Western clampdown on buyers of Russian barrels, meanwhile, is stopping some cargoes from discharging, with Indian refineries notably refraining from taking cargoes and signs that China might not be willing to pick up the slack.
US sanctions on Russia’s two largest oil producers, Rosneft PJSC and Lukoil PJSC, have made trading their oil even more difficult.
Russia’s oil-related tax revenues fell year on year by more than 24% last month, according to Bloomberg calculations based on Finance Ministry data. Russia’s government already expects funds from oil and gas flowing into the budget this year to be the lowest since the pandemic of 2020.
Iranian shipments have also surged, hitting the highest level in seven years in October, the same month when the US placed sanctions on a major Chinese terminal for its role in buying barrels from Iran.
OilX, a unit of consultant Energy Aspects, says its oil-on-water data covers confirmed shipments, including volumes from countries such as Iran and Venezuela, which often experience delays due to dark fleet activity. As a result, the volume may be revised higher over time. Vortexa says that in general its oil-on-water numbers tend to overcount and be revised lower as ships discharge. But the current situation is far from usual.
To be sure, there is plenty of non-sanctioned oil in tankers at sea, too, as global output increases. OilX data show that the single largest contributor to the increase since the end of August has been Saudi Arabia, closely followed by the US and Russia.
The kingdom shipped oil overseas at the highest rate in two-and-a-half years last month, as it continues to reclaim market share lost over years of output curbs from the Organisation of the Petroleum Exporting Countries and its allies.
At the same time, the amount of American crude at sea has climbed after shipments hit their highest monthly average level since July 2024 in October. Volumes rose after processors in Asia snapped up US cargoes over the summer when Middle Eastern prices jumped relative to other regions, in what is called an arbitrage window.
But the barrels on water from nations subject to sanctions represent a larger part of the increase than their collective slice of global crude production of about 17%, according to OilX data.
“It’s clear that there is a lot of crude on the water now,” Brian Mandell, executive vice president of marketing and commercial at Phillips 66, said on an earnings call late last month. “We’re kind of waiting to see what those crudes are.”
