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Unidentified owners assemble oil tankers to deliver Russian crude

Unidentified owners assemble oil tankers to deliver Russian crude

A vast shadow fleet of tankers with unknown owners is being amassed to service Moscow’s interest in circumventing the forthcoming sanctions.

A report by Bloomberg claims that Moscow is assembling 240 ships to enable the daily export of four million barrels of Russian crude oil to the Far East.

Christian Ingerslev, chief executive officer of Maersk Tankers A/S in Copenhagen, which operates a fleet of 170 ships, supported this notion in a statement: “It is very clear that a fleet is being assembled to transport this [crude oil] if you consider how many ships have been sold in the past six months to undisclosed buyers.”

According to the estimates of shipbroker Braemar, these 240 vessels have a history of assisting sanctioned petroleum regimes in continuing their oil exports–many of the tankers, including some of the 102 Aframaxes, 58 Suezmaxes, and 80 very-large crude carriers, were involved in transporting Iranian and Venezuelan crude just last year.

Anoop Singh, the head of tanker research at Braemar, concurred with Ingerslev’s conclusions, citing a recent surge in tanker trading. The purchasers are undisclosed companies based in Dubai, Hong Kong, Singapore, and Cyprus. Many of the tankers are older vessels, but the paper trail leading back to frequently obscure shell corporations makes it difficult to determine their precise origin. However, it is suspected that Russian shipowner Sovcomflot PJSC supplied some tankers for Russia’s shadow fleet.

In addition to relying on a shadow fleet to export its oil, Russia will increasingly rely on ship-to-ship transfers on the open seas due to the risk of sanctions associated with exporting directly from Russian ports and the need to consolidate a few small cargoes onto larger tankers for long-distance shipments.

Ship-to-ship transfers involve manoeuvring one vessel alongside another and connecting a conduit to allow cargo to be pumped between the two ships. It can take up to two days and is best performed in the calmest waters possible under favourable weather.

EU penalties are scheduled to go into effect on December 5, while the United States seeks to restrict Russian oil prices. Due to the difficulty of transiting European seas after the imposition of sanctions, a major portion of the Russian crude market will become inaccessible. Asia will continue to be the principal market for Russian crude.

Six weeks before the implementation of the bloc’s measures, it is unclear whether these measures will assist the world’s third-largest oil producer in delivering a significant portion of its output to buyers to prevent a supply shock.

The United States has been warning for months that Europe’s sanctions against Russia may cause such a shock. To avoid a price surge before the midterm elections in November, it is lobbying for companies to be permitted to utilise EU services, particularly insurance. To accomplish this, purchasers would have to agree to a controversial oil price ceiling.

What appears likely is that a significant portion of Russian flows will be handled by a complex and often hidden network of ships, owners, ports, and safe passages dominated by businesses still ready to trade with Russia.

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