EU Sanctions Aim to Disrupt Russian Oil Trade
EU countries have already sanctioned hundreds of tankers and are working on new measures aimed at the insurance, crewing, and other maritime services that allow those ships to operate. Brussels hopes these efforts will make the shadow fleet increasingly costly and difficult to run.
The sanctions come as Russia’s oil exports continue to be a significant source of revenue for the Kremlin. Despite international pressure, Moscow has managed to maintain its oil trade through various means, including the use of tankers that fly flags from countries not subject to EU or US sanctions.
Rising Oil Prices Offer Lifeline to Putin’s Shadow Fleet
However, a tighter oil market is now throwing a lifeline to Putin’s shadow fleet. As prices rise, the financial incentive to secure cheaper Russian crude grows, offsetting the higher risks and costs associated with sanctioned ships. This development has significant implications for global energy markets.
The demand for discounted Russian crude is expected to be driven by Asian countries like China and India, which rely heavily on Middle Eastern supplies and are likely to turn to Russia to make up for any shortfalls. Indian refiners have already reportedly moved to buy more Russian crude after the US temporarily eased pressure on the South Asian country by allowing purchases to resume last week.
India‘s Shift to Russian Oil
India imports an average of 10 million metric tons of crude oil per month through the Strait of Hormuz, said Vaibhav Raghunandan, an EU-Russia analyst at the Centre for Research on Energy and Clean Air. “Even if half of this volume is replaced with Russian volumes at sea, it will translate to huge profits for the Kremlin.” This shift comes as millions of barrels of oil were stranded at sea last week due to escalating tensions blocking the Strait of Hormuz, a maritime choke point through which a fifth of the world’s oil and liquefied natural gas flows.
The move by Indian refiners to buy more Russian crude is a significant development in the global energy landscape. As the situation continues to unfold, it remains to be seen whether the EU’s sanctions will ultimately disrupt Russia’s oil trade or if Putin’s shadow fleet will continue to thrive despite international pressure.
Original Article: Rising oil prices throw Putin’s shadow fleet a lifeline — Politico