After the Russian port was attacked, warnings were issued that oil cargoes may encounter force majeure.

Russian oil exporters are warning buyers that shipments from key Baltic ports may not be delivered.

Following a series of drone attacks in Ukraine that have crippled critical infrastructure this week, Russian producers have indicated that they may declare force majeure on shipments from key Baltic ports.

The focal point of the attacks is Ust-Luga, one of Russia’s most important export terminals. After being hit multiple times on Wednesday, oil shipments from the port have been suspended, and as of Friday, the fire is still burning. Industry sources told Reuters that shipments may not resume until mid-April.

Nearby Primorsk, another pillar of Russia’s Baltic export system, is in slightly better shape. The port has suffered damage but has partially resumed shipments. Even so, “partial” recovery has limited effectiveness here. Together, these two ports account for a significant share of Russia’s seaborne crude oil and refined product flows.

Media estimates suggest that, considering port outages, pipeline disruptions, and tanker seizures, about 40% of Russia’s oil export capacity is currently offline.

However, paradoxically, Russia is earning more money.

As Brent crude prices surpass $100 per barrel, reports indicate that Urals crude is also approaching this level amid supply tightness caused by the war, significantly boosting Moscow’s oil revenues. This surge in oil prices has prompted the Kremlin to shelve planned budget cuts and reconsider spending priorities, including military expenditures.

Currently, rising oil prices are masking operational losses, but this is limited.

Ukraine appears to be targeting Russia’s export capacity. President Volodymyr Zelensky has stated that long-range strikes are intended to continuously apply pressure just as the enforcement of sanctions is weakening and Russian oil is returning to the global market.

Russia may attempt to redirect oil transport through alternative export routes, including Black Sea ports or inland networks. However, capacity is limited, and these routes are already under strain.

The potential declaration of force majeure comes at a time when the oil market is already under pressure. The effective closure of the Strait of Hormuz has already removed a significant volume of oil and liquefied natural gas supplies from the market. Now, with the disruption of Russian exports, the result is a system with almost no buffer.

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