Insights 
VT 
Russia’s crude oil exports continue at high levels, as noted by Commerzbank’s commodity analyst. Data from Bloomberg show that Russia’s seaborne oil exports last week reached 3.56 million barrels per day, only marginally lower than the prior week. The 4-week average fell to 3.72 million barrels per day, following its peak since May 2023.
Deliveries to China and India, however, have seen a reduction in recent weeks. For the past three weeks, shipments to India fell below 1 million barrels per day, while China experienced cuts in the last two weeks. Yet, these figures might be incomplete and could see upward revisions due to the unusually low volume reported for India last week. It appears premature to conclude that recent US sanctions against major Russian oil companies are the cause of this decline.
Impact of US Sanctions
Despite these reductions, Russia’s overall high export figures imply US sanctions have not yet impacted Russian oil export levels considerably. The FXStreet Insights Team compiles market insights, drawing on expertise from commercial and external analysts to provide a broader perspective.
Given the steady flow of Russian oil, we see a cap on crude prices for the time being. The high total export volumes, with the four-week average recently hitting its highest point since May 2023, suggest the market remains well-supplied. This situation limits the immediate upside potential for futures contracts like Brent and WTI.
However, the reported drop in deliveries to India and China introduces significant uncertainty, creating an ideal environment for volatility trading. The CBOE Crude Oil Volatility Index (OVX) has ticked up to 42 in recent days, reflecting trader unease about whether this is a data lag or the first real sign of sanctions taking hold. We would consider using options, such as straddles, to profit from a potential sharp price move in either direction over the next few weeks.
In the very near term, a bearish stance seems prudent while we wait for more clarity on Asian demand. With Brent crude hovering around $87 per barrel, selling out-of-the-money call options with a strike price above $95 could be a viable strategy to collect premium. This position benefits from prices remaining stable or falling as Russian barrels continue to find buyers.
Market Reactions and Strategies
Looking further out, we must remember the market reaction in the spring of 2022, when fears of supply disruption first sent Brent crude soaring past $120 a barrel. If the new US sanctions do begin to severely disrupt the 3.7 million barrels per day of Russian supply, a similar price spike is possible. For this reason, holding some long-dated call options for the first quarter of 2026 offers a hedge against a sudden supply shock.
The situation also creates opportunities in spread trading, particularly the difference between Brent and Urals crude. That spread has recently narrowed to under $15, but if sanctions tighten and fewer buyers are willing to handle Russian oil, we expect that discount to widen significantly. With global refinery utilization rates already tight at 92%, according to recent government data, any disruption in this specific crude flow could have an outsized impact on product prices.
