Who Buys Russia's Oil and How Sanctions Are Driving Up Shipping Costs.

Russia's Oil Export Volumes

According to UATV: Russia exports 170 million tons of oil by sea each year, accounting for over 70% of its total petroleum exports. The primary buyers of this oil are India, China, and Turkey, which together purchase 92% of these seaborne shipments. This heavy reliance on a few key markets makes Russia's energy revenues vulnerable to geopolitical shifts and sanctions enforcement.

The Impact of Sanctions on the Market

Over the last three years, more than 900 tankers have been involved in transporting Russian oil. However, sanctions have significantly disrupted the market, causing the cost of vessel chartering and insurance to surge by 40-50%. Furthermore, over 79 sanctioned vessels ceased participating in Russian oil shipments in 2025. As a result, buyers are now demanding unprecedented discounts from Russia, exceeding 25% off the price of benchmark Brent crude.

By the end of December, the average shipping cost for Russia's Urals crude from Primorsk to India's west coast had surpassed $60 per ton. For comparison, the transportation cost for Russian oil was just $25 per ton a year earlier.

Oleh Luhovskyi noted that sanctions are driving up exporters' operational costs, which will likely influence the future development of the Russian oil market.

The rising transportation expenses and buyer demands for deep discounts indicate that the market for Russian oil continues to face significant pressure from international sanctions. This could impact Russia's export revenues and potentially lead to shifts in supply geography, as purchasing nations may seek alternative sources if costs climb further. Simultaneously, restrictions on vessels and heightened costs may contribute to a reduction in export volumes in the future.