Until this year, Germany and other European countries were among the biggest buyers of Russian oil. Everything changed after the Russian invasion of Ukraine – EU member states announced an embargo on Russian tanker oil, which will come into effect on Monday. To this end, a ceiling price will be applied to Russian oil and Russia will be forced to sell the raw material for a maximum of US$60 (approximately 56 Swiss Francs) per barrel (159 litres).
“We will not accept this ceiling price,” Kremlin spokesman Dmitry Peskov, 55, said on Saturday, according to Russian news agencies. He added that Moscow had already prepared for such a border, but did not give further details.
The so-called “shadow fleet” of ex-oil tankers may have played an important role in these preparations, as the “Financial Times” now reports. According to them, Russia has quietly accumulated more than 100 foreign tankers in order to be able to export Russian oil to other countries. This information comes from British shipping agent Braemar.
“Shadow Fleet” is no panacea against embargo
Norwegian energy consultant Rystad estimates that Russia will have added 103 tankers by 2022, by purchasing and redesigning vessels 12 to 15 years old serving Iran and Venezuela, two countries under Western oil embargoes. According to traders, the Shadow Fleet will reduce the effects of these measures, but not completely eliminate them – because Russia will need more than 240 tankers to maintain current exports.
“The number of ships Russia needs to transport all its oil is staggering,” said Craig Kennedy, a Russian oil expert at the Harvard Davis Center, which tracks the development of Russian ships. “We’ve seen quite a few sales to anonymous buyers over the past few months, and a few weeks after the sale, many of these tankers arrived in Russia to pick up the first cargoes of crude.”
The EU said any non-EU-flagged tanker that violates the price limit will be hit with a 90-day ban on Western shipping, rather than a lifetime ban as originally proposed. The move has been urged by both Greece and the United States, who want to ensure that the measures do not unduly put pressure on the global economy.
Theoretically, this could result in some operators deciding to accept a temporary ban if the proposed freight rates are high enough to transport Russian oil beyond the border. But Russia has long said it won’t do business with any country that fits the cap, meaning it may refuse to supply oil on terms set by the West. Instead, the country wants to use its new fleet to supply countries like India, China and Turkey, which have become larger buyers of its oil as Europe cuts down on imports.
“Sorry to lose so much time”
Despite the drastic effects the oil embargo will have on Russian exports, Ukrainian President Volodymyr Zelenskiy (44) is convinced that this is not enough. In his daily video address on Saturday evening, Zelensky said that with the cap considered to be US$60 per barrel (159 litres), a lot of money continues to flow into Russia’s budget and therefore the war against his country.
Zelensky said it is only a matter of time before the world has to resort to even tougher sanctions against Moscow, given the ceiling price of Russian oil. “It’s a shame that this time is now lost.” Andriy Yermak, 51, head of the Ukrainian presidential office, had previously called for a ceiling price of $30 per barrel. (chs)