TWO THIRDS OF tankers that called at key Russian Baltic and Black Sea oil export ports during May were covered by Western insurance providers, indicating wide compliance with sanctions and the dominant presence of Greek shipowners in facilitating shipments to third countries.
Of the 191 tankers tracked calling at five export ports, 63 were not entered with any of the 12 protection and indemnity clubs that are members of the International Group.
The International Group provides cover for 95% of the global tanker fleet but Western sanctions now prevent clubs from insuring vessels shipping Russian oil to third countries, unless they have received guarantees the cargoes comply with a price cap imposed by the Group of Seven industrialised nations and Australia.
The price cap of $60 per barrel began on December 5, with a $100 per barrel price on refined products such as gasoline and diesel from February 5.
The 33% of tankers calling at the ports of Primorsk, Ust-Luga, St. Petersburg, Novorossiysk and Tuapse that did not have IG insurance were all defined as part of the dark fleet * under Lloyd’s List methodology.
The price of Urals crude shipped from Baltic and Black Sea ports has been trading at a discount to Brent crude below the price cap for the past six months, making compliance more transparent.
That has made it easier for Greek shipowners to consolidate their share of business in sanctioned Russian oil trading in the Baltic and Black seas.
Tankers beneficially owned by Greeks comprised 47% of all ships loading cargo at the ports when measured by deadweight over May, or 92 tankers. That is roughly equal to April figures, when the number was 46%, data compiled by Lloyd’s List shows.
Before Russia’s invasion of Ukraine, Greek shipowners accounted for about a third of shipments from these ports, roughly in line with their global fleet ownership.
However, the war has super-charged profits for Russian markets, attracting Greek owners to ports largely shunned by other European and Western shipowners for the past 16 months.
Shipbrokers are quoting freight costs of around $9m for aframax tankers shipping Urals crude to India from Primorsk.
Shipbroker Braemar assessed time charter equivalent earnings for aframaxes on the Baltic trades at around $200,000 daily last week, four times earnings on other routes.
Anecdotally, freight costs are said to be around $9m for aframax tankers shipping Urals crude to India from Primorsk.
The extraordinary but unsubstantiated figure sees freight comprise some 25% of the delivered cargo cost, which along with the deeply discounted Urals price provides plenty of arbitrage and profit to be made for those prepared to call at Russia.
The price cap is clearly defining and delineating access of Western insurers, shipowners and charterers to Russian markets.
At the eastern Russian port of Kozmino, where the oil grade differs from Urals and is trading above the price cap, Greek shipowners and insurers have a limited presence.
Russia-owned and dark fleet vessels comprised 86% of all tonnage calling there, measured by deadweight. Thirteen Russian tankers called at Kozmino during May, with 19 tankers part of the dark fleet, according to Lloyd’s List methodology.
By contrast, dark fleet vessels comprised 31% of all tankers calling at Black Sea and Baltic ports, and Russia-owned vessels 7%.
(The definition for this anonymously owned fleet of elderly tankers is given below).
And just four Greece-owned tankers called at Kozmino, and another two owned by Turkish interests, data shows.
All Greece-owned vessels that called at Kozmino were insured by Western clubs indicating that attestations the cargo was compliant with the oil price cap were in place.
All up, seven of the 38 tankers tracked calling at Kozmino were covered by IG clubs, according to data.
The knock-on effect of sanctions in facilitating shipments on a dark fleet of elderly vessels was “diluting Western efforts” on sanctions, said Neil Roberts, head of marine and aviation for Lloyd’s Market Association.
The bifurcation of trade — as apparent with the different fleet composition of Kozmino liftings — is generating different problems, he said.
“As is becoming increasingly apparent, the continued pressures being applied to shipping in relation to Russian touch points have produced unintended consequences — bifurcation of trade and loss of political control. Numerous reports have detailed the emergence of a growing grey fleet that operates beyond the dollar and dilutes Western efforts. There are past and present examples of countries acting to protect their interests rather than comply with restrictive financial measures imposed from afar, so it cannot be a surprise that evasion is a result,” said Roberts.
Also noted this month was the increased presence of Turkish-owned tankers lifting Russian crude oil refined products, tallying 7% of ships by deadweight.
This reflects Türkiye’s increased role as a key buyer of refined products including diesel from Russia. European bans in Russian refined products imports
have been in place alongside the price cap for five months.
* Lloyd’s List defines a tanker as part of the dark fleet if it is aged 15 years or over, anonymously owned and/or has a corporate structure designed to obfuscate beneficial ownership discovery, solely deployed in sanctioned oil trades, and engaged in one or more of the deceptive shipping practices outlined by US State Department guidance issued
Lloud's List Daily Briefing 2 June 2023