A recent news article published in the Splash 247 states that Russia’s crude fleet deemed ready for December 5 EU ban.
European Union’s ban on Russian crude
With 13 days to go until the European Union’s ban on Russian crude shipments kicks in, analysts at BRS reckon Moscow has now accrued enough dirty shadow tonnage to permit the nation to support its crude exports at close to today’s level, and will likely have done similar on the product side when a similar ban takes effect in February.
By December 5, tanker owners that fly any European Union flag or carry P&I insurance from an EU club can no longer have crude oil onboard that originated in Russia, unless Russia has sold the crude to the buyer at or under an agreed price cap.
In recent months, Russian-linked parties have been on a massive spending spree, buying a vast swathe of vintage tanker tonnage in order to be ready for next month’s ban.
BRS is assuming a portion of the VLCC and suezmax tonnage currently engaged in the export of Iranian or Venezuelan oil will eventually be enticed towards undertaking Russian trade by the high potential returns available.
Increased use of a dark tanker fleet
The increased use of a dark tanker fleet, as well as ship-to-ship transfers, poses significant safety risks.
“There is uncertainty surrounding the upkeep of vintage shadow tonnage with many of these vessels having moved to niche classification societies so far this year,” BRS stated in its latest weekly tanker report, reckoning that the lack of mainstream classification and certification could eventually be viewed as a risk.
Alternative class organisations have sprung up in recent months to cater for the growing dark fleet such as Dubai-based Union Marine Classification Services.
There is uncertainty surrounding the upkeep of vintage shadow tonnage
Concerned at the potential for accidents from an ageing dark fleet of tankers, the Turkish Ministry of Transportation and Infrastructure last week issued a directive that every ship passing through the Turkish Straits after December 1, in loaded condition carrying oil, will need to provide a letter of confirmation that the ship has valid P&I insurance with sufficient coverage for that ship, voyage and cargo.
Analysis from ABG Sundal Collier suggests the sanctions on Russian oil will contribute at least 25% of the growth in tonne-miles in 2023.
About 2m barrels per day of crude will travel five to 10 times longer than before, according to ABG Sundal Collier analysis with big buyers in Asia replacing European customers.
Russian crude oil continues to exit western markets
Russian crude oil continues to exit western markets but has shifted east, most notably to China, India and Türkiye. For the latter three countries, Russian crude oil shipments have increased by 50%. Western markets have seen a reverse of this, down 65% since their 2021 high-point, according to data from S&P Global Market Intelligence.
How much more Russia can shift oil eastwards is in doubt, however. The International Energy Agency (IEA), in its latest monthly report for November, believes Russia’s oil production and exports are in for hard times, with the world’s largest country predicted to struggle to redirect all the lost European volumes elsewhere.
Explaining the IEA’s forecasting, analysts at Lorentzen & Co stated today: “In casting doubts on whether Russia will be able to redirect these volumes elsewhere, the IEA says that hitherto only China, India and Türkiye have appeared as crude oil buyers, despite massive discounts.”
That means, according to the IEA, that Russia’s oil production could be wiped out by as much as 2m barrels per day by the end of March compared with pre-war levels, reducing to 9.6m barrels per day next year, not helped by a lack of ice-class tonnage.
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Source: Splash 247