Russia turned to G7-linked tankers to increase crude exports in September, despite facing a lower price cap enacted by most Western countries and their allies.
S&P Global Commodities at Sea(opens in a new tab) and Maritime Intelligence Risk Suite data shows tankers flagged, owned or operated by companies based in the G7, the EU, Australia, Switzerland or Norway, or insured by Western protection and indemnity clubs, lifted 1.2 million b/d of Russian crude in September, up from 774,000 b/d in August.
The OPEC+ member hiked its seaborne crude exports to an 18-month high of 3.9 million b/d in September, and up from 3.3 million b/d in August, with a series of Ukrainian drone attacks affecting refining activities and freeing up more crude for exports.
The development came as the EU and other price cap coalition members lowered the threshold for companies to service seaborne Russian crude exports to $47.60/b from $60/b.
Platts, part of S&P Global Commodity Insights, assessed the monthly average price for Urals on a free-on-board Primorsk basis at $56.209/b for August and $56.535/b for September.
Liftings by tanker operators in Greece, Europe’s top shipowning nation, rebounded to 19.1 million barrels in September, up from 16.8 million barrels in August, after two months of declines, according to the CAS and MIRS data.
Compliance issues
Opinions have been mixed on whether a lower price cap would drive away G7 tankers and limit Russia’s shipping capacity, with the compliance level of Greek companies under watch.
“Owners are getting around it,” a broker said last month. “[Sanctions] have put a few people off, but the big hitters are still doing it.”
The European Commission recently identified 118 tankers accused of breaching the price cap and said they would be added to the current blacklist of 442 as part of the EU’s 19th sanctions package against Russia.
Other market watchers, like Windward, expect Greek shipments of Russian crude to gradually diminish as the trade restriction came out with a grace period of 45 days.
Further complicating the matter are the diverging price caps of the US and other Western countries, with industry participants struggling to navigate overlapping jurisdictional requirements.
“The potential for fragmented regulations is never good for shipping industry,” Jeanne Grasso, maritime lawyer at Blank Rome, said at a recent conference.
US sanctions are most powerful due to the dollar’s dominant currency status, while top Russian oil buyers like China and India are generally willing to receive EU- and UK-sanctioned ships, according to industry participants.
The non-G7 fleet, mainly composed of shadow fleet tankers operating outside of the price cap, loaded nearly 69% of Russia’s crude exports in September, according to CAS and MIRS data. Nearly 30 million barrels of the shipments, predominantly Urals, went through the Baltic Sea.
Shadow fleet ships tend to be old, lack proper insurance, and have falsified flag information, and northwestern European countries have vowed to enhance inspections on them to mitigate the associated environmental risks. Earlier this month, Denmark said it would conduct more frequent checks on ships’ environmental equipment at the anchorage of Skagen, which connects the North Sea with the Baltic.
Source: Platts
