Sanctions Strand Over 50 Russian Oil Tankers

Tsvetana Paraskova

Tsvetana is a author for Oilprice.com with over a decade of expertise writing for information retailers similar to iNVEZZ and SeeNews.

More Info

Premium Content material

By Tsvetana Paraskova – Jul 11, 2024, 5:00 PM CDT

U.S., UK, and EU sanctions have resulted within the idling of dozens of tankers used to move Russian crude.
The stepped-up sanction enforcement has created difficulties for Russia in transport its oil to prospects.
The transport price to move Russia’s sanctioned crude has slumped over the previous month.

Greater than 50 oil tankers which have beforehand transported Russian oil are actually sitting empty and idle within the Baltic Sea, the Black Sea, offshore Russia’s Far East, China, South Korea, and close to the Suez Canal.

All these tankers have been focused by U.S., UK, and EU sanctions in current months because the West ramped up efforts to choke off Russia’s oil revenues. Only a few of them, three to be exact, have loaded oil cargoes since they had been designated by a number of Western authorities, in accordance with tanker-tracking knowledge compiled by Bloomberg.

The stepped-up sanction enforcement has created difficulties for Russia in transport its oil to prospects, now primarily in Asia.

Nonetheless, the transport price of delivering Russian oil has just lately dropped to two-year lows and is now near the freight charges for non-sanctioned crude on related routes, analysts have estimated.

A part of the sanctions’ goal is to drive the price of carrying Russian crude so excessive that it will make it uneconomical for importers to be prepared to purchase Putin’s oil.

However the transport price to move Russia’s sanctioned crude has slumped over the previous month, which is at present blunting the Western sanctions’ impression on Russian oil gross sales and revenues.

This pattern might not be an enduring one as a result of the drop in freight charges was attributed to increased refinery processing charges in Russia this month, which have diminished exports, nameless sources advised Reuters this week.

Sanctioned Tankers

The U.S. began on the finish of final 12 months to ramp up sanctions on entities carrying Russian oil, aiming to stifle Putin’s revenues and tackle the violations of the worth cap mechanism below which Russian oil could be transported on Western-owned, insured, or financed tankers provided that the worth is crude is $60 per barrel or under.

Then the U.S. levied new sanctions towards Russia in February on the second anniversary of the Russian invasion of Ukraine and in response to the loss of life of opposition politician Alexey Navalny.

Among the many 500 new sanctions targets, the U.S. Treasury and State are concentrating on Sovcomflot and greater than a dozen tankers linked to the Russian state-owned fleet operator.

Final month, the UK explicitly targeted vessels in Putin’s shadow fleet, utilized by Russia to avoid UK and G7 sanctions, in its first sanctions immediately aimed on the darkish fleet, which is estimated to have grown to greater than 600 tankers recognized to have shipped sanctioned oil a minimum of as soon as.

The sanctions “goal to disrupt and enhance the prices of Russia’s efforts to bypass UK and G7 sanctions via its shadow fleet,” the UK mentioned.

Weeks after the UK’s newest sanctions, the EU adopted on the finish of June a brand new sanctions package deal towards Russia, targeting Russian LNG initiatives and shipments for the primary time and trying to curb Moscow’s use of the darkish fleet to avoid the worth caps on Russian crude and oil merchandise.

The EU positioned 27 vessels on a sanctions listing in a brand new measure concentrating on the dark fleet , which circumvents the worth caps on Russian oil.

“This measure additionally targets tankers a part of Putin’s darkish fleet which circumvent the EU and Worth Cap Coalition’s caps, whereas adopting misleading transport practices in full disregard of worldwide requirements,” the EU said.

The listing of 27 sanctioned tankers “could be up to date as frequently as wanted to handle the ever-evolving involvement of these vessels serving to Russia to wage conflict towards Ukraine,” the bloc added.

In Could, extra tankers working outdoors Western jurisdiction had been tracked transport oil from Russia as most crude costs proceed to be above the $60 a barrel worth cap, wrote Michelle Wiese Bockmann, Principal Analyst at Lloyd’s Record Intelligence.

The share of tankers by deadweight insured with the 12 golf equipment of the Worldwide Group of P&I Golf equipment was at a document low of 37%, whereas insurance coverage for the remainder was unknown, the analyst added.

Stranded Tankers

Whereas the darkish fleet is rising, the tankers sanctioned since October 2023 are idle and empty everywhere in the world, from the Baltic to the Pacific, in accordance with knowledge compiled by Bloomberg. Of the 53 ships which have been focused by sanctions since October 2023, solely three have loaded oil cargoes since being designated.

About half a dozen sanctioned tankers are idling empty every within the Baltic Sea and the Black Sea, off the Russian Far Japanese ports, offshore China and South Korea, and close to Port Stated, on the north finish of the Suez Canal, per the info compiled by Bloomberg.

Russia, nevertheless, continues with its efforts to skirt Western sanctions, and in lots of circumstances, it’s succeeding.

For instance, this spring, a Russian tanker of sanctioned tanker fleet operator Sovcomflot likely managed to circumvent U.S. sanctions by surreptitiously transferring its oil cargo to a different vessel offshore Singapore.

These sanction-busting makes an attempt with cargo switching, with transponders off, counsel the lengths to which Russia and patrons prepared to buy low cost crude may go.

By Tsvetana Paraskova for Oilprice.com

Extra High Reads From Oilprice.com