A ‘shadow fleet’ of oil tankers for Russia to bypass sanctions

A “shadow fleet” of tankers with unknown owners is being assembled in the world to transport oil in the interests of Russia, Bloomberg reported.

From December 5, the EU embargo on Russian oil will come into force, and from February 5 – on oil products. And Moscow is desperately looking for a solution to bypass sanctions.

Many ships are being sold to unknown firms

Chief Executive Officer of Maersk Tankers in Copenhagen, which operates a fleet of 170 ships, Christian Ingerslev said that “if you look at how many ships have been sold in the last six months to unknown buyers, it becomes clear that a fleet is being created to carry these cargoes”, Bloomberg is quoting him as saying.

Shipbroker Braemar estimates that 240 more ships – 102 Aframaxes, 58 Suezmaxes and 80 very large oil tankers – have been bought to support Russia’s four million barrels a day to the Far East. Last year they carried Iranian and Venezuelan oil.

A shadow fleet is being created

Anoop Singh, head of tanker research at Braemar, said there has been a sharp increase in tanker trading by unknown actors in Dubai, Hong Kong, Singapore and Cyprus. Many of them are older vessels and will be part of the shadow fleet, with some tankers also supplied by Russian shipowner Sovcomflot.

Bloomberg also predicts a surge in ship-to-ship transshipment. This is due to both the sanctions risk of handling exports directly from Russian ports and the need to transship small cargoes to larger tankers for long travels.

It is unclear whether the bloc’s measures, which are set to go into effect in roughly six weeks, will be enough to assist the third-largest oil producer in the world deliver most of its output to consumers and avert a supply shock.

A covert network expected to bypass the ban on Russian oil export

What appears to be a given is that a significant portion of Russian flows will be managed via a sophisticated, and frequently covert, network of ships, owners, ports, and safe routes, which is predominated by entities still prepared to do business with Russia.

In addition, there will very probably be a rise in ship-to-ship transfers, or the switching of cargo between tankers while at sea. This is a result of the requirement to combine a few modest cargoes onto bigger tankers for long journeys as well as the risk of restrictions associated with handling exports straight from Russian ports.

China and India poised to become top destinations

Although ships frequently sailed directly to European consumers, Asia, particularly China and India, seems poised to overtake Europe as the popular destination after December 5.

The so-called ship-to-ship transfers will very definitely be prohibited once the sanctions take effect, and conducting them inside the Baltic Sea won’t be very advantageous for Russia or its purchasers. This is so that oil destined for Asia can, in theory, be transferred onto enormous supertankers that are too large to leave the Baltic with commodities on board.

A shuttling effect was created when the initial vessel turned around after transferring its cargo to the supertanker and went back for additional Russia oil. All of that will lead to further Russian economic fall and Putin’s regime crisis will deepen. Finally, Moscow will not be able to pursue its war against Ukraine. It’s what the Western sanctions aimed at after Russian troops invaded Ukraine in late February.

Source: Bloomberg

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