THE EU had planned to mark the four-year anniversary of Russia’s full-scale invasion of Ukraine on Tuesday with new sanctions and an end to EU ships carrying Russian oil.

Thanks to Hungary’s veto it faces an embarrassing delay to that plan.

The maritime services ban is delayed rather than dead for now, but Hungarian opposition is not the EU’s sole blocker to this latest tightening of economic sanctions against Russia.

Greece, along with Malta and Cyprus has been voicing concerns for a while. The oil price cap may not have been a perfect policy tool, but it at least offered a pragmatic response to the realities of trade.

Punishing European (read Greek) shipowners by introducing a services ban would only benefit the shadow fleet and China, ran the argument.

Brussels had clearly expected more support than it received. While the UK were expected to follow the EU, the response from the rest of the G7 had ranged somewhere between tepid non-committal noises to a direct ‘no’ from the US. 

The EU’s sanctions uncertainty, however, is tomorrow’s concern for the shadow fleet which is facing more immediate reconfiguration questions.

Venezuelan crude isn’t sanctioned any more, but the assumption that Venezuela’s shadow fleet would be quickly absorbed into Russian and Iranian trades has proved wide of the mark.

Of the 50 tankers laden with Venezuelan oil or en route to load at the time of US intervention, Lloyd’s List has confirmed new employment for just 13 tankers, suggesting that we might now have a surplus of shadow fleet tankers in the market.

The delayed EU ban could yet shake up the shadow fleet trades again, but as one broker put it this week, we might now be looking at the “Iranification” of Russian trade. Remember how VLCCs in Iran trade were making big bucks in 2019-2022 while elsewhere the market was suffering — that was the door closing between the two trade types.

There are currently too many swing factors from Trump tariffs 3.0 to the looming Iran action being threatened by the US, but the flow of sanctioned crude is rapidly reconfiguring. As a result, it is getting more difficult, and less profitable, for the operators moving it. It’s also getting harder for Russia and Iran who have previously been able to keep pumping oil even if some barrels go unsold, putting the surplus into storage.

A delay to the EU maritime services ban is just one of many factors set to influence the immediate future of shadow fleet trades, but this latest evolution of sanctioned oil flows is far from over.

Richard Meade,
Editor-in-chief, Lloyd’s List

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