Ghost ships and transhipments, so Moscow bypasses the EU-Corriere.it blockade

Russia has reiterated that it will continue to sell to partner countries on market terms even if this means a reduction in production. Meanwhile, according to rumors, he has prepared a fleet to circumvent the embargo ordered by the EU starting from 5 December 2022, even if this would not be sufficient to transport everything that will be stopped by Europe. Moscow does not intend to passively submit to the European embargo. After the OPEC+ meeting, the Russian Deputy Prime Minister, Alexander Novak, reiterated that he believed the price cap European Union and declared that Russia will sell oil and petroleum products to the countries that work with it on the basis of market conditions even if this means that we have to reduce production a little.

Trick

At the same time, Per would be studying ways to somehow get around the block, starting from ghost ships who would travel with tracking systems disconnected and tanker registration to tax havens where cover flags are offered. Another trick, writes the Wall Street Journal, the transshipment of crude oil into larger vessels by mixing it with oil of similar characteristics. In fact, the law provides that to be considered Russian, at least 51% of the oil must come from companies in the country. According to the International Energy Forum, the embargo will lead to at least 3 million barrels less each day for the countries of the European Union which, combined with the OPEC cuts (2 million barrels decided in October), if the situation in China stabilizes , could lead to a new surge in prices with heavy repercussions for inflation.

Shadow fleet

The European embargo adds to the one decided in the spring by the USA, Canada, Great Britain and Australia. According to many brokers, Moscow is gearing up to set up a fleet of 100 old tankers to get around Western restrictions. Although traders claim that the shadow fleet will reduce the impact of such measures, but it will not completely eliminate it. The number of ships Russia will need to move all of its oil is surprising, said Craig Kennedy, a Russian oil expert at Harvard’s Davis Center who is monitoring the phenomenon. We have seen a number of sales to anonymous buyers over the past few months, and within weeks of the sale several of these tankers showed up in Russia to load their first cargo of crude, he told the Financial Times. Russia is still expected to face a shortage of tankers and struggle in early 2023 to maintain its export levels, which would boost prices, analysts said. The deficit could widen when the EU ban extends to Russian refined fuels in February, Kennedy said. Russia will need access to even more tankers than usual because the duration of each trip will be longer and oil that was previously sold in Europe will be sent to new buyers in Asia.

Anonymous purchases

Anonymous tanker purchases are tracked through logs. The vessels are generally 12-15 years old and are expected to be scrapped in the next few years, said Anoop Singh, Braemar’s tanker research chief. These are buyers that we, longtime brokers, are not familiar with,” Singh admitted. But we believe that most of these vessels are destined for Russia. In 2022, Russian-linked operators are suspected to have bought as many as 29 supertankers – known as VLCCs – each capable of carrying more than 2 million barrels. Moscow also appears to have purchased 31 Suezmax tankers capable of carrying around 1 million barrels each and 49 Aframax tankers each capable of carrying around 700,000 barrels, the analyst added. Andrei Kostin, head of the Russian state bank VTB, seemed to confirm the suspicion last October by explaining that the country would have to spend at least 16.2 billion dollars for the expansion of the fleet of tankers. While Russian Deputy Prime Minister Alexander Novak explained in March that the country would build its own supply chains in crude oil.

Punitive measures

The punitive measures by the EU and the G7 will cut Moscow off a large part of the global tanker fleet, explains the Financial Times, because insurers like Lloyd’s of London will be prevented from covering ships carrying Russian crude to whatever destination unless it sells below the maximum price. Russia has responded that it will not deal with any country that imposes the cap. From this year Europe will live without Russian oil. Moscow has already clarified that it will not supply oil to those countries that support the price ceiling, a measure contrary to the market. Wait and see that very soon the EU will accuse Russia of using oil as a weapon, warned Mikhail Ulyanov, Russia’s permanent representative to international organizations in Vienna. Traders are betting that black gold will be directed to other markets, namely India, China and Turkey which have become Russia’s biggest clients since March.

Russian deficit

Braemar predicts that Russia’s deficit will be between 700,000 and 1.5 million barrels a day. Rystad estimates that Russia will be short of 60-70 tankers and expects seaborne exports to decline by about 200,000 barrels per day. Eventually total Russian volumes lost to the market could reach 600,000 bpd if Moscow retaliates by cutting off pipeline supplies to Europe — which are not subject to sanctions — before it has enough tankers to divert them, Rystad said. Russia needs more than 240 tankers to keep its current exports flowing, cut short Viktor Kurilov, an analyst at Rystad. You can come up with all sorts of tricks, but there is too much oil to move: the Russians will always struggle to keep their exports intact, without price limits, Kennedy commented.