US sanctions hit Russian oil fleet, $3.5B cargo stranded at sea
The sanctions imposed by the United States on January 10 against the Russian oil sector have halted about one-tenth of Russia's shadow fleet. The value of the oil it transports could exceed $3.5 billion.
According to a report released Wednesday by the International Energy Agency (IEA), the new sanctions may significantly disrupt Russian oil supplies. Based on ship traffic data analyzed by Reuters, at least 65 tankers carrying Russian oil were adrift by Monday after the US Treasury Department announced the sanctions on Friday.
Tankers off the coasts of China and Singapore
Five of these tankers, carrying about 4 million barrels, have stopped off the coast of China's Shandong province, where many independent refineries, known for actively purchasing Far Eastern oil grades such as ESPO and Sokol, are located. Seven more tankers have anchored off the coast of Singapore, and dozens have halted off the Russian coasts, in both the Baltic Sea and the Far East.
In total, oil equating to about 2.5 weeks of Russian exports is stuck at sea. Although the US has allowed two months to complete shipments already underway, some buyers are reluctant to accept the oil, fearing the repercussions of the sanctions.
According to ship tracking data analyzed by Bloomberg, in the week leading up to January 12, 27 tankers with 21.1 million barrels of crude oil were loaded at Russian ports, compared to 28 tankers with 21.2 million barrels the previous week. The average daily export in December was nearly 3 million barrels. This means that the 65 tankers stopped after the sanctions could carry approximately 53 million barrels over about 2.5 weeks.
Value of the halted oil
In December, according to the Centre for Research on Energy and Clean Air, crude oil worth nearly $6 billion (at 184 million euros per day) was exported. In the week leading up to January 12, the value of maritime exports amounted to $1.45 billion, according to Bloomberg. Therefore, the value of the oil halted on the tankers, based on the latest data, could range from $3.3 to $3.6 billion.
Lloyd's List Intelligence estimates that the shadow fleet, which transports oil while bypassing sanctions, includes nearly 670 ships. Thus, nearly 10 percent of these tankers were halted. In addition to the 180 ships already under sanctions, the US Treasury Department imposed new measures on another 183.
The IEA has not yet changed its forecast for Russia for January, citing "uncertain prospects" related to the impact of US sanctions on the market. "It is still too early to assess the potential effect of these new measures, but according to reports, some operators have already begun to withdraw from delivering Iranian and Russian oil," the agency stated.
Chinese companies are searching for solutions to this issue, Bloomberg reports. Although there is an interim period before the sanctions take full effect during which oil can still be unloaded, many in Shandong are hesitant to accept the oil. Even before Washington's decision, one of China's largest port operators, Shandong Port Group, announced that starting January 6, it would stop accepting ships blacklisted by the US Treasury Department.
Meanwhile, India has announced it will permit tankers under sanctions, hired to transport oil before January 10, to unload at its ports until March 12, the end of the settlement period set by the US.
The US Treasury Department has imposed restrictions on 69 "Sovcomflot" ships, including 54 oil tankers and four LNG tankers.
