Russia Considers Oil Production Cuts as Exports Fall and Storage Fills Up

Russia's Oil Market Under Pressure

According to Главком: Faced with sanctions that have slashed exports and led to a significant stockpile build-up, Russia is now considering cutting its oil production. The country's seaborne crude exports have fallen sharply, from 3.8 million barrels per day in December to 3.4 million in January and just 2.8 million in February. This pressure is compounded by India, which was the largest buyer of Russian crude in 2025, preparing to limit its purchases. Oil inventories on tankers have now surpassed 150 million barrels, while onshore storage facilities are 51% full. Three major Indian firms-Indian Oil, Bharat Petroleum, and Reliance Industries-have already suspended buying Russian oil. This situation highlights the ongoing impact of Western sanctions and shifting global trade patterns on Russia's key revenue source.

Mounting Inventories and Export Woes

The steep decline in exports and the concurrent rise in oil inventories are raising serious concerns about the sustainability of current production levels. Russia currently pumps about 9.3 million barrels of oil per day, with roughly half of that volume destined for export. The strain on storage capacity is becoming critical:

• Onshore oil inventories stand at approximately 16 million barrels, representing 51% of total capacity.
• When factoring in the potential total capacity of storage systems, including pipelines, the figure could reach around 100 million barrels.

The risk of production cuts is growing as purchases from India plummet. India's imports of Russian crude dropped to about 1.1 million barrels per day in January, down from around 1.7 million barrels per day in 2025. Meanwhile, Russian oil shipments to China are on track to set a historical record in February, potentially exceeding 2 million barrels per day. The logistical chain reaction triggered by reduced buying could further complicate matters for Russia's oil sector, forcing difficult decisions about output. While increased flows to China may offset some losses, over-reliance on a single major buyer introduces new risks for the stability of Russia's energy exports.

The sustained drop in Russian oil exports, particularly under sanctions, points to potential long-term structural shifts in the global market. Losing India, a buyer that played a crucial role in sustaining Russian exports, could have significant economic consequences for the country. This evolving dynamic underscores Russia's challenge in redirecting its energy flows in a constrained market.