Russia is finding it increasingly difficult to sell its oil in Europe and other traditional markets, as a mixture of sanctions, market pressures and consumer choice are shifting against Moscow. It’s not that Russia is barred against selling oil.

What’s going on is that insurers are not covering ships that are going to pick up crude at Russia’s Black Sea ports. Captains don’t want the stuff on their boats, so they’re not sailing to even ports that are allowed. And even if you do get Russian product out of the country, you then have to find a place where the dock workers will actually unload it. And that’s just not happening almost anywhere in the European sphere.

We’re even hearing some reports that the Russians are starting to have problems selling crude out of their Pacific loading port.

Now, all this has led to a lot of speculation that the Chinese are going to be able to swoop in and just grab 100% market share from everything that other folks are not buying. With some products, there might be some truth to that, but not with oil. 

The problem is infrastructure. The pipelines that carry oil to Russia’s Pacific loading terminal, and directly into China itself, source their crude from eastern fields. Russia’s western exports are sourced from western fields. There’s precious little in the way of connecting infrastructure between the two–meaning if Russia can’t load tankers in the Baltic and Black seas, there’s little reason to pump it at all.

History tells us a backup of oil does not go well.

One of the things we saw back in 1989, when the Russian system, the Soviet system, collapsed is when there wasn’t enough demand in Russian industry, pressure started building up in the pipes from the point of consumption or the point of sale all the way to the wellhead, and they had to shut the whole thing down.

Because Russia’s weather is erratic and harsh, and because most Russian production is in the permafrost, even a short-term shutdown can mean you can never use that well again.

It took ’em 32 years to repair that damage and get back to production levels that they had back in 1989. They had only gotten there like a quarter ago, and now they have to go through it all over again.