- The US sanctions 183 vessels, targeting 42% of Russia’s oil exports, mainly to China and India.
- Key Russian oil producers and insurers face restrictions.
- Export disruptions could raise global freight rates and tighten tanker availability.
The Biden administration has unveiled its most comprehensive sanctions package against the Russian shipping market since the 2022 invasion of Ukraine, as reported by Riviera Maritime Media. The measures focus on disrupting the transportation of Russian crude oil exports, with China and India being major importers.
Sanctions Overview
On January 10, the US Department of the Treasury imposed sanctions on 183 vessels, including 143 tankers, as well as oil traders, Russian oilfield service providers, and senior energy officials. Two of Russia’s largest oil producers, Gazprom Neft and Surgutneftegas, were also sanctioned, along with Russian maritime insurers Ingosstrakh Insurance Co and Alfastrakhovanie Group. The UK mirrored these sanctions, further isolating Russian energy players.
Impact on Tankers
The sanctions target a substantial number of vessels in Russia’s “shadow fleet,” including tankers with carrying capacities exceeding 100,000 dwt. Many of these vessels have been involved in transporting Russian crude to China and India, with some exclusively handling Arctic crude.
Export Challenges
“These tankers transported more than 530,000 barrels of Russian crude exports last year, accounting for about 42% of Russia’s total seaborne crude exports. More than half of this volume was shipped to China, making up roughly 61% of China’s seaborne imports of Russian oil,” said Kpler senior freight analyst Matt Wright.
The remainder of the exports largely went to India, contributing to nearly a third of the South Asian nation’s total intake of Russian oil.
Mr. Wright added, “The swift sanctions are expected to clamp down on Russian oil exports, pushing oil sellers to scramble for new vessels to bridge the shipping capacity gap – a challenge that is unlikely to be resolved anytime soon.”
Market Implications
China and India may turn to Middle Eastern and West African suppliers, increasing demand for non-sanctioned vessels. This will likely drive up Aframax, Suezmax, and VLCC rates, affecting global freight markets. A shrinking pool of available vessels is anticipated as sanctions intensify.
The Shadow Fleet
Russia’s shadow fleet, comprising about 1,700 older vessels, plays a central role in transporting sanctioned oil and gas. These vessels operate under opaque ownership and often lack proper insurance and classification, making regulatory enforcement complex.
Impact on Global Oil Trade and Shipping Dynamics
The sanctions aim to cut off a vital revenue stream for Russia while reshaping global oil transportation dynamics. However, the tightened vessel supply and rising freight rates highlight the challenges facing the energy and shipping sectors.
Did you subscribe to our daily Newsletter?
It’s Free Click here to Subscribe!
Source: Riviera Maritime Media
