Because of the war waged by the Kremlin in Ukraine, Russian oil is not in the odor of holiness everywhere. It is not within the European Union (EU), where its importation by sea is officially banned since Monday, December 5. Nor is it in the rest of the world.
After many diplomatic convolutionsEuropean Union, G7 and Australia have finally decided to cap the price of a barrel of crude at 60 dollars (56.8 euros), price cap beyond which insurance companies, essential in maritime transport, will not have to accept any cover contract.
So Moscow, whose finances depend so much on this black gold which it risks not knowing what to do with, is getting organized. According to experts quoted by the Financial Times, the country is in the process of building up a vast “ghost fleet” of tankers acquired through opaque circuits and structures, and intended to circumvent the consequences of this ceiling price imposed by the EU.
The specialized company Braemar estimates in particular that the country has bought, directly or indirectly, most often via other countries subject to sanctions such as Venezuela or Iran, more than 100 of these ships. Identical calculation for the analysis company Rystad, according to which 103 more tankers joined the Russian bosom in 2022.
While reality may end up overshadowing its initial rantings, Russia continues to assert thatshe will never accept price cap, what “prepare your answer” and that it will not deal with countries submitting to these sanctions put in place by the West and its allies.
bras de fer
If pipeline transport is not yet affected by these sanctions, its solution is therefore the same as since the beginning of the war: turn to new customers – China, Turkey or India. The Indian minister responsible for energy issues has made no secret of the country’s desire to continue to deal with its new second largest crude supplier.
However, to compensate for what the ships insured by Western companies, in particular by the omnipresent Lloyd’s of London, will no longer carry, new ships are needed. Lots of new boats. Hence this frenzy of purchases on the part of actors for the most part still unknown to specialists, but undoubtedly acting on the orders of the Russian government.
“These are buyers that the oldest specialists do not know. We believe that the majority of these ships are destined for Russia.”, says Anoop Singh, of the firm Braemar, to the Financial Times. The same analyst also reports that these boats are generally old carcasses at the end of their career, only a few years from dismemberment.
“We saw quite a large number of sales to unknown buyers, and within weeks of the transactions these vessels were in Russia to pick up their first shipment of crude”says Craig Kennedy, expert in oil issues for the Davis Center at Harvard, who monitored the phenomenon.
Thus, for the year 2022 alone, twenty-nine “supertanker” type vessels (VLCCs for “very large crude carriers), each capable of transporting more than 2 million barrels of crude. Russia and its fuzzy intermediaries are also said to have purchased 31 boats of the “Suezmax” type (1 million barrels each) and 49 others named «Aframax» (700,000 barrels).
Enough to divert all Russian oil maritime traffic to Asia, where are the country’s new customers? A priori no, far from it. As the Financial Times reports, Braemar thinks that Russia will lack transport capacity of between 700,000 and 1.5 million barrels per day. For its part, Rystad calculates that 60 to 70 additional tankers would be needed, with an estimated drop of 200,000 barrels per day.
“Russia needs more than 240 tankers to maintain its current flows”, says Viktor Kurilov, from Rystad. It could be worse: although it is not in the immediate interest of its finances, if Moscow decides to cut off the tap of the pipelines to Europe, the fall could be 600,000 barrels per day, which could explode the world prices for crude oil and its derivatives.
The phenomenon is already underway: according to the Bank of America, which nevertheless underlines the volatile nature of its forecasts, the price of Brent (currently around 85 dollars) could once again climb next year, reaching $110.
Russia and the crude-producing nations, grouped within OPEC+ (the Organization of the Petroleum Exporting Countries and its allies), seem decided to lower their production againdespite pressure from Washington and the risks of recession that this would pose to the global economy: the oil war has only just begun (again), and no one knows who will emerge victorious.