Russia has done it again. Just as it seemed that Western sanctions were beginning to put a stop to the movement of Russian oil across the world’s seas, Moscow has once again donned its magician’s garb. The dreaded “Ghost Fleet,” over which the West seemed to be tightening its grip, has reappeared out of nowhere to ferry Russian crude to the ends of the earth so that Vladimir Putin can continue to fund his costly war in Ukraine. Russia’s revenues have been eroded by the sharp decline in oil prices, but MOscú is trying to compensate for this drop in crude oil by flooding the sea again with its “forbidden crude oil”. A major blow to the strategy pursued by the United States just before the first potential global presidential elections organize decisive presidential elections in which geopolitics is the major issue.
A growing number of oilmen sanctioned for their role in transporting Russian oil are finding work again, according to reports. BloombergSince late April, at least 17 shipments of crude oil and refined products have left Russian ports aboard ships sanctioned by the United States, the United Kingdom or the European Union in response to Moscow’s 2022 invasion of Ukraine. Most were carried aboard ships that were owned by Russian oil giant Sovcomflot at the time they were sanctioned.
In the immediate aftermath of the sanctions, the vast majority of affected tankers sat idle, some for up to eight months. But shippers increased their use of blacklisted vessels following the successful delivery of cargoes to China, carried for at least part of their journeys on board tankers sanctioned by the West with their location beacons turned off. Now, directly, these old and often reconditioned oil tankers – a real threat to naval and environmental security – no longer seek to hide their movements, with cargoes openly delivered to both China and India.
Oil tankers accelerate as summer ends
The use of sanctioned tankers accelerated in August and is expected to continue to increase in September. If the trend continues, this will ease the logistical constraints that have emerged. Still, Russia managed to find the ships it needed, even though other ships were immobilized. As many as six ships sanctioned by at least one of the US, UK or EU loaded Russian cargoes last month, a figure that was already matched in September. With 11 other sanctioned tankers anchored near the Russian Pacific port of Kozmino, seven calling at Ust-Luga, three more in the Black Sea for months and two off Murmansk, there is a good chance that more blacklisted ships will pop up again in the second half of September.
Among the ships in question, Viktor Bakaev received a cargo of about 730,000 barrels of crude oil from the Urals in the Baltic port of Primorsk on July 21. After leaving the Baltic through the ecologically fragile Danish Strait, the tanker turned north, skirting the Norwegian coast, before heading back along Russia’s Northern Sea Route, escorted by an icebreaker on the final leg past Wrangel Island, before turning south towards the Bering Strait and its final destination in Dongying, China.
The sanctioned tankers Galaxy and Zaliv Ammurskiy followed the same route along Russia’s northern coast and were loaded at the Arctic terminal in Murmansk. Two others – the Bratsk and the Belgorod – which had disappeared from digital tracking systems during their first voyages under sanctions, openly carried their next shipments to China, where they arrived earlier this month.
One of the most combative analysts of Moscow’s shrewd maneuvers, Robin Brooks, managing director of the Institute of International Finance (IIF), considers the case of India to be particularly harrowing: “India has become a huge refinery for Russian oil. If Russian oil arrived in India on Western ships operating under the G7 ceiling (theas a measure imposed by the West to cap Russian crude oil at $60 a barrel and which has been the subject of repeated leaks), but much of this oil is shipped on Putin’s ghost fleet, which means India helps fund Russia’s invasion of Ukraine. “This has to end.”
On the side of the European institutions, David O’Sullivan, the EU’s special representative for sanctions, pointed out this week that the community bloc has recently focused on imposing selective sanctions on specific vessels involved in illegal oil handling and stressed that sanctions against these vessels make it difficult for the system to function. O’Sullivan also noted that EU seeks to identify and sanction numerous small shell companies set up by Russia to support its parallel oil business, and for the United States to take steps to sanction companies linked to specific addresses, a tactic the EU is exploring.
The ghost fleet poses a significant and growing threat to the environment. The ships are old and have very ordinary insurance (covering almost nothing), which increases the risk of an oil spill, a potential disaster for which Russia would likely refuse to pay. In addition, these ships can cause collisions, leak oil, break down or even sink, posing a threat to other ships, the water and marine life.
On the brink of disaster
It is estimated that more than 1,400 ships have gone over to the dark side in Russian service, so the risk of environmental damage is considerable.. For example, since the beginning of 2022, 230 Ghost Fleet tankers have transported Russian crude oil through the Danish straits 741 times. In addition, a Ghost Fleet tanker heading to load crude oil in Russia collided with another ship in the strait between Denmark and Sweden. Last year, a fully loaded tanker lost propulsion and drifted away from the Danish island of Langeland for six hours. The ecosystem recovery from a potential oil spill could take decades.
In addition to the environmental issue, Russian oil transported by sea is almost entirely directed to Asian markets, with India, China and Turkey being the main buyersIn 2023, 86% of oil exports were destined for friendly countries, compared to 40% in 2021, and 84% of petroleum product exports, compared to 30% in 2021. This change in export destinations highlights the changing geopolitical landscape of the oil market due to sanctions and the rise of the ghost fleet.
Moscow’s Tricks to Sell Its Oil
From Reuters They explain that, for example, Russian insurers are playing an increasingly important role in facilitating the country’s oil shipments to India, its largest buyer, according to data obtained from trade and shipping sources. Russian companies provided insurance coverage for 60% of Moscow’s oil shipments to India in July, up from 40% in December last year, according to calculations by Reuters based on the ship’s documents.
When using Russian insurers, Moscow can sell oil above the Group of Seven (G7) limit price of $60 per barrel.The European Union and Australia imposed it in an attempt to limit Russia’s oil revenues after its invasion of Ukraine.
Western services, such as shipping and insurance, can only be used for Russian goods sold at or below the limit price. Russian companies that provided insurance for exports to India in July are included Ingosstrakh, Rosgosstrakh, Alfastrakhovanie and VSK InsuranceBefore the war in Ukraine, carriers mainly relied on large Western insurers to obtain comprehensive protection and compensation coverage.
However, measures are multiplying to address the challenges posed by the ghost fleet: tougher sanctions against individual ships, tighter control of financial institutions involved in Russian oil deals, and fines that would limit sales or dismantle tankers. Moscow always seems to find a risky way out of all these obstacles.
Despite this, the G7 countries continue to take steps to tighten price cap controls and continue to put pressure on Russia. The United States has introduced a series of sanctions against ships and shipowners suspected of violating the price cap. However, there are concerns that these measures could lead to higher energy prices and an escalation of tensions with Russia, so they are by no means being taken to extremes. “The Russian ghost fleet is an international problem that requires international solutions”The Danish Foreign Ministry said it believes it is very difficult to solve this problem without causing collateral damage to the crude oil market or increasing geopolitical tensions.
