US waiver unlikely to lift Russian oil exports already near capacity

• Russian crude exports from western ports rose 9% in early May to 2.35-2.4 million bpd, up from 2.2 million bpd in April, approaching pipeline system capacity limits
• The waiver only permits purchases of Russian oil loaded onto vessels by April 17, effectively capping volumes and preventing access to newly loaded cargoes
• Ukrainian drone attacks on Russian refineries since March have disrupted domestic processing, forcing Russia to prioritize exports to maintain production levels despite limited spare export infrastructure capacity

Summary

The U.S. has issued a third extension of its sanctions waiver on Russian oil exports, but the measure is unlikely to significantly increase Russia's crude shipments as they are already operating near infrastructure capacity limits, according to traders and shipping data.

Key Developments:

• Russian oil exports are currently running at approximately 2.35-2.4 million barrels per day (bpd) from key western ports (Primorsk, Ust-Luga, and Novorossiysk)
• Shipments increased roughly 150,000 bpd (~9%) in the first two weeks of May compared to April
• The Transneft pipeline system is operating close to maximum capacity, limiting further export growth

Waiver Details:

U.S. Treasury Secretary Scott Bessent extended the waiver to support "energy-vulnerable" countries. However, the waiver only permits purchases of Russian crude loaded onto vessels by April 17, effectively capping volumes and preventing access to newly loaded cargoes.

Market Context:

Russia has prioritized crude exports following Ukrainian drone attacks on refineries since March, which disrupted domestic processing and freed up more oil for export. Despite elevated export levels, traders indicate spare capacity in export infrastructure is diminishing.

"The system is running tight. There isn't much room to push additional barrels," one trader noted, adding that "the ceiling is already in sight."

Strategic Implications:

Russia is maintaining high export volumes to sustain production levels, which reportedly rebounded in April. However, infrastructure constraints prevent meaningful expansion despite the sanctions relief, limiting the waiver's practical impact on global oil supply.