The increase in revenue is explained by two factors: oil became more expensive because of the war in the Middle East, and Russia simultaneously ramped up shipments — the strongest since mid-May.
Almost all Russian oil goes to China and India, and refiners in those countries are now having problems with their usual suppliers — those in the Middle East. The shortage of oil in this direction is pushing up prices for Russian grades.
Shipments delivered to India last week brought in the most money since early May, estimates the analytical company Argus Media. Russian ESPO crude is being offered to Chinese plants at a higher price than Brent — with a premium of more than $20 per barrel on a delivered basis.
The main increase came from the Baltic port of Ust-Luga: in September it is shipping about a third more, or 160,000 barrels per day, than in August. To make room there for Russian oil, all exports of the Kazakh grade KEBCO were redirected this month to Novorossiysk on the Black Sea.
Novorossiysk is considered a more vulnerable port, and shipments there resumed only at the end of August after Ukrainian drone strikes. In August, oil production in Russia fell for the ninth month in a row, to 8.72 million barrels per day, which is more than 1 million barrels per day below the level allowed for Russia under the OPEC+ deal.
Some of the oil goes for export simply because there is nowhere to process it: strikes on refineries and gas processing plants continue almost every night. Exports still are not enough to keep the wells fully loaded. Iran has effectively blocked the Strait of Hormuz, forcing Saudi Arabia to ship oil around it via the East-West pipeline to the Red Sea, but on September 10 drones disabled this pipeline. In the southern Red Sea, tankers are attacked by the Houthis, and the U.S. blockade of Iran-linked vessels has halted shipments to China by about 1.5 million barrels per day.
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