In response to European countries cutting back on purchases of Russian oil in retaliation for the invasion of Ukraine, Russian President Vladimir Putin has set out to find other markets. "Higher domestic consumption and increased sales to Asia, he said, will offset the drop in shipments to Europe. Some of this has already been seen. Shipments from Western Russian ports to the Asian market rose from being practically nonexistent before the invasion of Ukraine to 875,000 barrels per day in early April, writes Julian Lee, an oil strategist at Bloomberg First World. This volume is equivalent to Russia’s combined daily exports to Germany, France, Greece, Italy, and the United Kingdom prior to the invasion.

The strategy seems to be working, but it has a number of drawbacks that limit it, Lee notes. Refineries are designed to process specific types of crude oil that cannot be easily substituted with other types of oil. Customers—India is one of the main buyers—are unwilling to risk their long-term relationships with their traditional suppliers, primarily from the Persian Gulf, which is also a constraint.

An additional factor is the strain this strategy places on the availability of tankers to transport the oil. It takes a tanker one week to travel from a western Russian port to a Dutch or German port. Reaching the west coast of India takes a month. According to Lee, diverting all Russian crude oil shipments from the Baltic states to India would require five to six times as many ships as those used on the original routes.

The situation is not easy for the Russian president.