In continuation of our latest analysis on the Strait of Hormuz and Venezuelan reactivation, the Baltic corridor has emerged as the next pressure point. Data shows that Russia’s Baltic export infrastructure was the last reliable western outlet. It is now under sustained attack.
The Mirage
At first glance, Russia’s seaborne export picture resembles a recovery story. Total crude and product exports (Figure 1) opened 2026 at approximately 5.5 million bpd, rose to around 6 million bpd through week 8, dropped sharply below the five-year minimum between weeks 8 and 10, then rebounded past 6 million bpd, approaching the five-year maximum.
It is not a recovery. It is a drawdown. Russian floating storage tells the real story, and crude and products are diverging. Crude floating storage (Figure 2a) built sharply through late 2025, peaking at around 20–22 million barrels in January 2026. Volumes were concentrated in the North West Pacific (vessels waiting to discharge into China) and the UK Continent. From February onward, this stock collapsed to approximately 5.5 million barrels, nearly fully drained.
The trigger was a 30-day US sanctions waiver issued on March 13, allowing countries to purchase Russian oil already loaded on tankers. Indian buyers, hit hardest by the loss of nearby Gulf supply, moved first. The crude flush happened quickly and is now largely complete.
Clean product floating storage (Figure 2b) tells a different story. It peaked at 5–7 million barrels in January–February, concentrated in the North West Pacific and Mediterranean–Black Sea. Unlike crude, it has not collapsed.
As of late March, it remains elevated at 3–4 million barrels. However, the product velocity chart (Figure 3) shows that the drawdown is now accelerating sharply. This is the steepest product draw rate in the entire 2023–2026 dataset, reaching negative 150 to 200 thousand bpd in late March.
This reflects the Baltic strike impact in real time. With Ust-Luga rail shut down on March 25 and a gasoline export ban effective April 1, buyers are scrambling to pull forward remaining floating product inventories before the sanctions waiver expires on April 11.
Meanwhile, total Russian crude and products on water remained broadly unchanged at approximately 190 million barrels.
The barrels did not disappear. The crude floating storage drawdown converted almost entirely into active transit, not discharge. This mirrors the mechanism previously observed in Iranian crude: floating storage accumulates under constraints, then mobilizes when conditions align.
The evidence is visible in the cross-reference. Figure 4 shows the Baltic’s share of total Russian exports declining while total exports increase. If incremental barrels were coming from new terminal loadings, the Baltic share would hold or rise. Instead, it falls. The additional volumes originate from vessels already laden and now incentivized to move.
This buffer is finite and time-bound. The sanctions waiver applies only to oil loaded by March 12 and expires on April 11. After that, any remaining floating Russian barrels return to sanctioned status.
Crude floating storage is already nearly depleted at approximately 5.5 million barrels. Product storage, at around 2.7 million barrels, is declining rapidly but not yet exhausted.
The current “recovery” in Figure 1 is borrowing from the future, not preventing the drop.
Last Corridor Standing
The pressure on Russia’s export infrastructure is structural. In the Black Sea, the Novorossiysk terminal (capacity approximately 700,000 bpd) has been operating below capacity since a Ukrainian naval drone disabled one of the CPC terminal’s deep-water moorings in November 2025. Two tankers were struck while loading Kazakh crude in January.
At sea, European navies have been seizing shadow fleet tankers, disrupting approximately 300,000 bpd of Arctic crude exports from Murmansk.
Against this backdrop, Baltic volumes held steady at approximately 2.2 to 2.5 million bpd. The corridor did not expand, but it continued functioning while others contracted. As a result, the Baltic’s share increased from a typical 35–40 percent range to 43–47 percent. This was not growth, but concentration driven by a shrinking denominator.
Ust-Luga and Primorsk became the last functioning export corridors. Post-2022, the discharge geography of Baltic barrels transformed completely
The Indian Ocean now absorbs approximately 50 percent of Baltic-origin volumes, China 15 percent, Southeast Asia and the Far East 10 percent, and the Mediterranean 15 percent.
Before sanctions, the dominant destinations were short-haul European trades. Voyage distances have expanded significantly. A laden voyage from Ust-Luga to Rotterdam takes four days. To West India, 26 days via Suez. To Singapore, 33 days. To China, 45 days. Round voyages are approximately double.
The system was already consuming significantly more vessel time per barrel than before the war.
The Shock
Between March 22 and 31, Ukraine struck both Baltic terminals repeatedly. Ust-Luga was hit on March 22, 25, 27, 29, and 31. Primorsk was struck on March 22–23, igniting a fuel depot, damaging multiple berths and two tankers, and again on March 27.
Satellite data confirmed simultaneous fires at both ports. Ust-Luga oil loadings have been fully halted since March 25. Primorsk partially resumed on March 26 after sustaining damage.
Russian oil producers have warned buyers of possible force majeure on Baltic supplies. Industry sources indicate Ust-Luga may not resume until mid-April.
The March 31 strike on Ust-Luga is particularly significant. Drones hit Transneft’s crude loading infrastructure, not storage tanks. Storage tanks can be bypassed. Loading jetties are critical single points of failure.
According to Ukrainian officials, approximately 60 percent of Ust-Luga’s capacity was destroyed. Rail logistics have also been disrupted. Ust-Luga halted all rail cargo acceptance on March 25 after damage to the unloading rack. This cuts product supply from four major refineries: KINEF, YANOS, Moscow, and Ryazan, with a combined processing capacity of approximately 1.1 million bpd.
Fuel oil, which has limited domestic demand and accounts for 18–35 percent of refinery output, becomes a bottleneck under export constraints. This forces processing cuts or shutdowns.
On March 27, a nationwide gasoline export ban was introduced from April 1 through July 31. This adds administrative constraints on top of physical disruption.
Allies have reportedly urged Kyiv to scale back strikes as global prices rise. Ukraine continued strikes the following day. Six attacks in ten days on Ust-Luga alone.
The Ton-Mile Multiplier
The disruption splits tanker markets into two tiers. It also increases demand for compliant tonnage as cargoes shift away from sanctioned fleets.
Crude flows from Primorsk and Ust-Luga, approximately 1.3 to 1.5 million bpd, must be replaced. India and China cannot forgo these volumes.
Replacement sources such as the US Gulf, Latin America, and West Africa require significantly longer voyages. Many routes now bypass the Red Sea and Hormuz, routing via the Cape of Good Hope.
The impact is mechanical. A Ust-Luga to India round voyage takes approximately 52 days on an Aframax. A US Gulf to India voyage via the Cape takes around 84 days on a Suezmax. Each replacement barrel ties up a vessel for an additional 32 days. Same barrels.
Longer journeys. More ships absorbed.
Petroleum products, around 400 to 500 thousand bpd, also require replacement. Short Baltic routes relied on MR2 tankers. Longer routes shift demand toward LR1 and Aframax vessels. This reflects distance-driven vessel upsizing. We quantify this effect in vessel equivalents per month.
Three Scenarios
Scenario 1: Products halted, crude partially resumes: 600K bpd
Ust-Luga products offline (~400K bpd).
Crude disrupted: ~200K bpd.
Primorsk largely resumes.
Scenario 2: Sustained degradation: 1.3M bpd
Strikes continue every 2 days.
Ust-Luga fully offline (~800K bpd).
Primorsk reduced by ~500K bpd.
Products: ~500K lost.
Crude: ~800K replaced from USG (500K), Latam (200K), WAFR (100K).
Scenario 3: Full shutdown: 1.8M bpd (Feodosia precedent)
Both terminals permanently damaged.
Products: ~500K lost.
Crude: ~1.3M replaced from USG (700K), Latam (350K), WAFR (250K).
Crude VE = dirty tanker demand (Afra/Suez/VLCC). Product LR1/MR2 VE combines both dirty and clean products. Breakdown by product type:
Scenario 1 (400K products): 250K dirty (Ust-Luga fuel oil, VGO) → +10 LR1 VE. 150K clean (Primorsk diesel, naphtha) → +6 LR1 VE.
Scenarios 2–3 (500K products): 300K dirty (Ust-Luga) → +13 LR1 VE. 200K clean (Primorsk) → +8 LR1 VE.
Both segments gain from the same double multiplier: route lengthening (Baltic → USG/COGH) and vessel upsizing (MR2 → LR1).
What It Means
Dirty tanker demand benefits directly from the ton-mile multiplier as replacement crude travels longer distances via the Cape of Good Hope. In Scenario 3, the system absorbs the equivalent of nearly 11 additional VLCCs and 29 Aframaxes operating continuously, driven purely by distance.
Suezmaxes are clear beneficiaries, as they are the natural class for long-haul Atlantic-to-Asia crude trades.
These projections assume full barrel-for-barrel replacement. If supply cannot ramp sufficiently, particularly with OPEC+ capacity constrained behind Hormuz, replacement volumes may fall short. In that case, the per-barrel ton-mile effect remains, but total fleet absorption declines.
Product tanker demand also benefits, and the magnitude is larger than crude. In Scenario 3, products absorb approximately 21 LR1 equivalents per month, compared to 11 VLCC equivalents for crude. This reflects both longer routes and vessel upsizing.
The Compound Effect
Hormuz is blockaded. Baltic terminals are under sustained attack. Novorossiysk is impaired. Russia’s shadow fleet faces seizures. The only seaborne corridors without direct physical disruption are the Atlantic Basin and Kozmino.
Nothing disappears from global consumption, provided replacement barrels exist. If Atlantic Basin supply ramps up, all flows travel further and the ton-mile multiplier applies fully. If not, the system tightens. Less oil moves. Fewer ships are employed. Demand destruction becomes possible.
The Baltic disruption sits at this inflection point. The outcome depends not on tanker markets, but on upstream supply response.
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Source: AXS Marine
