First signs of post-sanctions stranded Russia oil cargoes emerge at Chinese ports
Vessel tracking shows disruption and delays to Russian oil flows three days after more than 155 tankers are sanctioned in largest-ever crackdown on Russian oil exports
With more than half of Russian crude last month shipped on tankers now sanctioned, oil producers are expected to recalibrate seaborne logistics and consolidate cargoes onto larger tankers that are able to call at ports in China and India, the biggest buyers
AT LEAST four tankers laden with a total of 3m barrels of Russian crude are waiting off eastern ports in China as far-reaching sanctions imposed by the outgoing Biden administration on January 10 reverberate across oil markets.
Mermar (IMO: 9231212), Viktor Titov (IMO: 9301407), Huihai Pacific (IMO: 9346732), and Olia (IMO: 9268112) were among 155 tankers and 183 ships sanctioned by the Office of Foreign Asset Control along with oil traders, marine insurers, producers Gazprom Neft and Surgutneftegas, and other energy commodities service providers.
The aframax tankers are waiting at anchor off Shangdong province near ports of Rizhao, Qingdao, Yantai, Dongying, Binzhou and Weifang that supply independent refiners from the region who are the biggest buyers of Russian crude.
The Shandong Port Group said three days before the Ofac sanctions were announced that all sanctioned vessels were banned from calling at its ports, affecting not just Russian imports but those from Iran and Venezuela.
Refineries there are now deciding whether cargoes loaded in Russia before the ban can be discharged at ports, according to media reports.
Olia, Mermar and Huihai Pacific loaded at Kozmino on January 8, 6 and 4 respectively while Viktor Titov loaded at De-Kastri terminal on January 3, all on Russia’s eastern seaboard.
The discharge delays are the first signs that the largest-ever sanctions crackdown on global shipping is biting and the first test of their effectiveness in curtailing Russian oil revenue.
Freight rates for tankers soared on Monday along with oil prices, which hit a six-month high, on the anticipated recalibration of oil flows to favour Middle East suppliers.
The average very large crude carrier rate climbed 27% in one day to its highest since October, according to the Baltic Exchange. Suezmax tankers saw smaller gains of 14% while aframax tankers remained unchanged.
Vessel-tracking revealed dark fleet tankers deployed in Russia trades have back-tracked or changed course in the past three days, amid analysis showing more than half of Russian crude last month was loaded on ships under Western sanctions.
Heng Tai (IMO: 9419448), a 16-year-old Panama-flagged aframax tanker that joined the dark fleet after being sold in May reversed course on Saturday to avoid sailing in ballast northward through the English Channel to Ust-Luga, less than 24 hours after Ofac’s announcement.
The vessel is now at anchor in international waters off the French coast.
Another sanctioned tanker, Arjun (IMO: 9297357), arrived today at the Vadinar anchorage, India, to deliver 730,000 barrels of Urals crude, Vortexa data shows, but it was not clear whether the ship had discharged.
Last Friday’s action was part of a co-ordinated campaign by the EU, UK and US against Russia over the final half of 2024 to limit oil revenues that are funding its war in Ukraine which is now entering its third year.
More than 200 Russia-trading tankers were designated between December 17 and January 10 by Western regulators, Lloyd’s List analysis shows. Just over a third of all crude and refined products were shipped last month on tankers since sanctioned, analysis using data from Lloyd’s List Intelligence and Vortexa shows.
While EU and UK-sanctioned tankers have continued trading over past months, analysis show US penalties are the most disruptive with most sidelined or used for floating storage.
Last week’s action therefore suggests that Russian oil producers will have to rapidly reorganise seaborne logistics flows to circumvent these latest bans. which targeted 68 ships from the so-called dark fleet in addition to those owned by Russian government-controlled Sovcomflot.
Most of the 155 ships listed on Friday are crude tankers and include six very large crude carriers, 22 suezmax, and 84 aframaxes, analysis shows.
Cargoes are expected to be consolidated on to larger VLCCs or suezmax tankers that are not banned via ship-to-ship transfers, allowing oil to sail for ports in China and India, the biggest buyers.
This borrows from the convoluted and highly inefficient logistics chain evolved by Iran to sell and ship oil to China, using a range of deceptive shipping practices to hide the origin and destination of its sanctioned oil.
Using STS transfers to consolidate Russian crude cargoes is already practiced but is not widespread.
Aframax tankers calling at Baltic and Black Sea ports have been observed transferring cargoes onto very large crude carriers at various hubs in international waters in the Mediterranean and mid-Atlantic including off Greece, Malta and Cueta, and Augusta, Italy.
The sanctions impact some 7.3m bpd of oil exported from Russia. Surgutneftegas and GazProm Neft comprise around 970,000 bpd of the federation’s 4.9m bpd crude exports, according to analysts and International Energy Agency data.
The largest oil producers Lukoil and Rosneft were not targeted.