2023-04-20 22:40:14
Western sanctions are meant to make it harder for Russia, if not prevent it, from generating billions of dollars in revenue by funneling its resources onto the global market. Yet Moscow is managing to maintain its supplies of raw materials, including selling its oil to buyers around the world.
Par Alexander men
Barely a year ago, the collective West enacted a first set of far-reaching sanctions against Russia in response to the Russian invasion of Ukraine, thus unleashing a veritable economic war against the country. The US, members of the European Union and other countries have imposed, among other things, an embargo on Russian oil and a “price limit” for deliveries of Russian crude oil.
Moscow is trying by all means to protect itself from these restrictions on its possibilities of trading on the crude oil market and is doing everything possible to ensure that its oil finds buyers all over the world. Let’s not forget that Russia is the second largest oil exporter in the world, that in 2021 it was the second largest oil supplier to the EU and that, despite the sanctions, it achieved in the oil sector the last year about 153 billion euros — a record figure since 2011.
However, it is not surprising that Russia was able to officially consolidate its dominant position on the world oil market and that it still remains today the second largest oil exporter in the world. From this point of view, the key aspect is the Asian markets, which until now played only a minor role for Moscow. Before the war in Ukraine, Russia exported more than 7.5 million barrels of oil, gasoline and diesel every day, most of which was destined for Europe and the USA. Deliveries to Asia did not represent a significant proportion at the time
in Russian exports. In India, in 2021, Russian oil deliveries represented only 3% of global imports, while China, the world’s largest oil importer, only covered 15% of its needs with Russian oil.
In the meantime, this situation has changed fundamentally. This is how the Russia once again dethroned Saudi Arabia in its role as the largest gas supplier to China, as reported by the Archyde.com news agency, which refers to customs data for recent months in the People’s Republic. Consequently, Russian oil deliveries to China increased in 2022 by a quarter compared to the previous year to reach 1.94 million barrels per day.
Even the development of the Indian market represents a remarkable opportunity for Russian oil exporters. Their deliveries to the most populous country in the world quadrupled last year, so that Russia was able to reach the rank of fourth exporter after China, the United Arab Emirates and the USA.
Moscow’s response to the oil price limit
So that oil exports can continue regardless of the restrictions imposed by the Western market, Russia has equipped itself with a considerable tanker fleet, known as the “shadow fleet”. Observers speak of this procedure, which probably enabled the Russian government to buy more than 600 tankers on the world market, as a clever device to minimize its need for European ships and thus circumvent the sanctions. As many experts meanwhile say, there are also other goals that Moscow is pursuing through this strategy.
On the one hand, the Russians want to reduce the supply of oil transport by sea, which would allow them to drive up freight prices as well as the general cost of transport. Freight costs play a central role in the export of oil, if only because every year almost two billion tonnes of crude oil, or almost 60% of the quantities extracted worldwide, are which are transported by sea.
In this regard, the countermeasures that the Russians managed to take in response to Western sanctions have a considerable impact on the tanker market, as a result of which the transport of gasoline and other fuels has seen its price increase dramatically. As the industry portal Transport Topics reported a few weeks ago, freight costs for even relatively small tankers increased by 280% in the second week of February to almost US$42,000 per day, and the cons -Russian measures in the field were not without responsibility in this situation.
For the Kremlin on the other hand, with this massive intrusion into the logistics system of oil transport worldwide, it is a question of increasing the demand for ships while decreasing the availability of tankers for Western countries. This would considerably weaken the influence of the West on the oil market.
According to Transport Topics, other exporters have already noticed a shortage of tankers since the development of the shadow fleet in the first half of February would have left few vessels to service other exporters. “What we hear is that many ships have been taken off the tonnage list and redirected to Russia. [. . . ] And so, yesterday, there was practically no possibility of getting supplies of boats. says Eirich Haavaldsen, an analyst at Norwegian investment bank Pareto Securities.
As for the size of the Russian tanker fleet, the industry, meanwhile, has recognized that the Russian shadow fleet is much more than a hundred ships, as the media was still claiming just a few months. According to data from the Dutch oil giant Transfigurationit is rather 600 ships, of which 400 are reserved for the transport of oil. This represents 20% of the world’s tanker fleet, which means that one in five vessels is operated by Russia. But it could also be more than a quarter of all ships worldwide.
Translated from German by Didier Aviat
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