Russia is still relying on European shipping to transport its oil even as the country’s supplies exceed Group-of-Seven price caps, according to a researcher.
Roughly two-thirds of Russian crude and petroleum products is being transported by vessels insured or owned in nations implementing price caps imposed by the G-7 and its allies, the Helsinki-based Centre for Research on Energy and Clean Air said. That shows Moscow is still heavily using the European shipping industry, it said.
The cap was designed to keep enough oil flowing to the world while crimping the Kremlin’s revenue. But as well as still using Western vessels, Russia has assembled a so-called shadow fleet of tankers operating outside jurisdictions of countries imposing sanctions. They tend to carry oil over shorter distances where the same amount of capacity can move more supply, the CREA said.
“More than by the use of ‘shadow’ tankers, the impact of the oil price cap has been undermined by a failure of the participating governments to fully enforce the price cap and punish violators,” Isaac Levi, the CREA’s team lead for Europe-Russia policy and energy analysis, said in a statement Tuesday.
The G-7 and its allies imposed a cap on Russia’s crude oil exports in December and on refined fuels like gasoline and diesel in February. Russian crude has been trading above the price cap of $60 a barrel since mid-July.
Some of the country’s supply sold in Asia has started fetching a premium to benchmarks, and with Brent crude trading near $95 certain Russian grades are trading closer to $100 than $60. Russian crude can exceed the cap if no Western services are involved.
About three-quarters of all shadow fleet trips were dedicated to transporting Russian crude, the CREA said.
