10 million barrels of Russian oil are stuck with nowhere to go

Over a month's worth of Russian crude-oil production is stranded near South Korea.
Currency disagreements with importers have left 14 cargo tankers idling.
US sanctions also play a role, with India turning to alternative sources of crude.

Tankers carrying over a month's worth of Russian oil production have been stuck in a weeks-long limbo, as US sanctions and payment disagreements keep buyers at bay.

Vessels loaded with 10 million barrels of the Russian Sokol crude have been idling around the South Korean port of Yosu, Reuters reported. To save on freight costs, three supertankers have become a floating storage, accepting product from smaller vessels ship-to-ship.

In total, 14 ships have sat stranded as importers of Russian crude are unable to settle on a currency with which to pay for the oil.

Payment disagreements between India and Russia have spanned for months now: After Russia had issues repatriating its massive stockpile of Indian rupees, it has insisted on using the Chinese yuan, something New Delhi seeks to avoid.

The lack of common ground has started impacting the trade between the two major oil partners, as India has recently turned to the Middle East to source its crude imports.

And despite millions of Russian barrels ready to offload, there's no indication that could happen soon. An Indian Oil Corp source told Reuters that the firm doesn't anticipate receiving any Sokol grade oil in the near term.

That's also as the US has started to clamp down harder on restrictions that aim to curb Moscow's energy trade. Since October, the US Treasury has sanctioned eight cargo ships that carried crude above the $60 price cap, a measure imposed on Russia following its invasion of Ukraine.

In mid-January, India's Petroleum and Natural Gas Minister Hardeep Singh Puri acknowledged that Western sanctions were a factor in pursuing alternative trade: "In the Russian case, it is a question of price cap and it is also a question of some of their shipping entities coming under adverse notice of others."

Russia is highly dependent on its energy trade. While flows have remained high, Moscow's tax revenue from oil and gas still dropped 24% in 2023.

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