IEA: Russia's revenue from oil product exports fell again in September

Russia's revenue from exports of oil and oil products continues to decline after a steep summer drop, even as crude oil export volumes themselves are rising. According to a report by the International Energy Agency (IEA), Russia's revenue from exports of oil and oil products reached USD 13.35 billion in September, down from USD 13.58 billion in August. The main reason is a combination of continuing Ukrainian drone attacks on Russian refineries, lower prices and sanctions-related constraints. As a result, Moscow is significantly increasing crude oil exports but is unable to offset the decline in exports of refined products, which are crucial in terms of profitability.

The IEA says Russia exported around 7.4 million barrels per day of oil and oil products in September, an increase of 210 thousand barrels from August. Crude oil exports reached 5.1 million barrels per day, up by around half a million barrels per day from August and the highest level since May 2023.

By contrast, exports of refinery products, primarily diesel and fuel oil, fell to 2.4 million barrels per day, the lowest level in the past decade. The drop in product exports reduced revenue by around USD 440 million. Russia is unable to offset this shortfall with higher crude oil exports, so total revenue continues to decline. Between July and August, the loss was even steeper, with total revenue falling by nearly a billion dollars in just one month.

Another important factor is the growing discount of Russia's Urals blend to benchmark Brent crude, which widened to more than USD 13 per barrel in October. This loss of margin translates into lower profitability for Russian exports, even though volumes remain high. According to OPEC data, total Russian production reached 9.32 million barrels per day in September, slightly below the OPEC+ alliance quota of 9.41 million barrels. However, rising volumes do not mean higher returns – the decisive factor is the quality and added value of product exports, which are currently severely disrupted.

Refinery attacks – Ukrainians are squeezing Russian revenue

The main reason for the decline in revenue is Russia's limited ability to process oil as a result of repeated Ukrainian drone attacks. Since the summer, Ukrainians have struck more than sixteen Russian refineries with combined capacity of over 120 million tonnes per year, equivalent to around one-third of the country's processing potential.

Although some facilities have partially returned to operation, repeated strikes and technically demanding repairs mean that lost capacity remains unrecovered over the long term. Russian refineries are estimated to be currently operating with roughly 30% of their capacity lost.

Moreover, the damage often targets key units such as distillation or cracking units. Repairs then require specific components and foreign technologies, to which Russia has limited access due to sanctions. The result is outages prolonged for months and a growing number of facilities that remain out of operation.

Crude oil exports can no longer grow further

Available data indicate that a significant recovery in Russian refining capacity is unlikely in the near term. Even if the attacks ceased, repairs would take months due to missing spare parts and technologies.

The IEA had previously assumed that Russia could restore most of its processing capacity this year, but in light of the extent of the damage it has revised its outlook. It is now expected that Russian refinery capacity will not exceed 5 million barrels per day by June 2026. Structural constraints in Russia's oil sector could deepen further in the coming quarters as attacks continue, potentially reducing Moscow's revenue by tens of billions of USD annually over the long term.

In response to Ukrainian strikes, Russia has managed to increase crude oil exports by up to 500 thousand barrels per day compared with volumes exported in August. However, as Bloomberg notes, Russia appears to have reached the limit of its capabilities in this regard.

Spare capacity at the country's ports is almost exhausted. The two main ports – Primorsk (Baltic Sea) and Novorossiysk (Black Sea) – are operating close to full capacity. A third port, Ust-Luga, could theoretically export more, but its shipments have remained below the October 2024 peak since the start of the year. Total spare capacity at these three ports amounts to just 165 to 265 thousand barrels per day.