Russia’s crude oil exports remain strong, as noted by Commerzbank’s commodity analyst. Bloomberg data indicates that last week, Russia’s seaborne oil exports reached 3.56 million barrels per day, only slightly down from the previous week. The four-week average has dropped to 3.72 million barrels per day, following its recent peak in May 2023. Shipments to China and India have decreased recently. For the past three weeks, deliveries to India have fallen below 1 million barrels per day, and China has cut back its purchases in the last two weeks. However, these numbers might underestimate actual shipments, especially for India last week, which could mean revisions upward. It seems too early to say that recent US sanctions against major Russian oil firms are the cause of this decline.

Impact of US Sanctions

Despite the drop in shipments, overall export figures from Russia indicate that US sanctions have not yet significantly affected oil exports. The FXStreet Insights Team provides a wider market view, using data from commercial and external analysts. With the steady flow of Russian oil, crude prices are likely to remain capped for now. High export volumes, with the recent four-week average at its highest since May 2023, show that the market is adequately supplied. This limits the potential for price increases in futures contracts like Brent and WTI. Nevertheless, the decrease in deliveries to India and China introduces uncertainty, creating a suitable environment for volatility trading. The CBOE Crude Oil Volatility Index (OVX) has risen to 42 recently, indicating trader concerns about whether this is just a data lag or an early sign of sanctions having an effect. Options like straddles could be useful for profiting from possible sharp price movements in either direction in the coming weeks. In the short term, a bearish strategy seems wise while we await more clarity on Asian demand. With Brent crude around $87 per barrel, selling out-of-the-money call options with a strike price above $95 could be a smart move to collect premiums. This strategy thrives if prices remain stable or fall as Russian oil continues to be sold.

Market Reactions and Strategies

Looking ahead, it’s important to recall the market’s reaction in spring 2022 when supply concerns pushed Brent crude over $120 per barrel. If US sanctions significantly disrupt the 3.7 million barrels per day from Russia, we could see another price spike. Therefore, holding long-dated call options for the first quarter of 2026 could provide a safeguard against sudden supply shocks. This situation also opens up opportunities for spread trading, especially between Brent and Urals crude. This spread has recently narrowed to under $15, but if sanctions tighten and fewer buyers are willing to engage with Russian oil, we expect that discount to widen considerably. With global refinery utilization rates already tight at 92%, any disruption in Russian crude flow could greatly affect product prices. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now