Russia forming 'shadow fleet' to circumvent oil sanctions — FT

3 December 2022, 05:23 PM
EU, G7 and Australia set a price cap for Russian oil (Photo:REUTERS/Dado Ruvic/Illustration//File Photo)

EU, G7 and Australia set a price cap for Russian oil (Photo:REUTERS/Dado Ruvic/Illustration//File Photo)

Russia is assembling a "shadow fleet" to circumvent restrictions on oil sales imposed on it by Western countries in response to its full-scale war against Ukraine, the Financial Times reported on Dec. 2.

Since the beginning of 2022, Russia has bought more than 100 ships to transport its sanctioned products, the FT reported, citing estimates by shipping broker Braemar and energy consultancy Rystad.

According to the newspaper, Braemar noticed a significant increase in unknown buyers. They buy vessels that are 12-15 years old and are subject approaching write-off. According to analysts, they are purchased for Russia, which will then use them to deliver oil to India, China and other Asian countries.

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Traders say the "shadow fleet" will reduce the impact of sanctions, but not eliminate it. Despite the purchases, in the first months after the introduction of the price ceiling, Russia will still lack ships to transport oil, which will reduce its exports and raise prices on the market, the FT writes.

Moreover, in February 2023, according to experts, the situation may worsen — then the EU embargo on marine supplies of oil products from Russia will come into force. Rystad analyst estimates that Russia needs more than 240 tankers to maintain current export volumes.

On Dec. 2, the EU agreed to set a maximum price for Russian seaborne oil of $60 per barrel. The bloc was followed by the G7 countries and Australia.

Earlier, Bloomberg reported that Poland and the Baltic States have achieved the introduction of a mechanism by which the price can be reviewed every two months. In this case, the price should be lower than the market price by at least 5%.

Moscow stated that it would not sell oil and gas to the countries that joined the restrictions. According to Bloomberg, Russia has already lost up to 90% of its key oil market in the northern countries of the European Union.

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