Oil price cap: How the Kremlin is trying to circumvent the restrictions with its own shadow fleet
Created: 12/12/2022, 8:00 p.m
By: Lisa Mayerhofer
An oil embargo and an oil price cap are intended to dry up Russia financially.
But the Kremlin is trying to circumvent the restrictions by any means necessary.
Moscow - Russia earns billions from its energy exports - and can thus continue to finance its war against Ukraine.
In order to slow down Russian President Vladimir Putin, the West has agreed on an oil embargo and an oil price cap.
Oil price cap: Russia builds shadow fleet
The price cap is intended to force Russia to sell oil to buyers in other countries for a maximum of USD 60 per barrel in the future.
The price of around 57 euros per 159 liters will then be well below the market price for Russian Urals crude oil.
The Russian government rejected this price cap.
"We will not recognize any upper limits," said Kremlin spokesman Dmitry Peskov, according to the Interfax news agency.
Countermeasures are being prepared.
One of these countermeasures is apparently the establishment of a so-called shadow fleet.
According to experts, there are increasing indications that Russia is building its own fleet of old, decommissioned oil tankers, which will continue to sell the oil without the participation of Western companies.
Because the oil price cap is supposed to work worldwide via the Western market power in shipping services: After the price cap comes into force, companies from G7 and EU countries and also Australia may only provide services related to the ship transport of Russian oil if the upper limit is observed when selling the oil .
At present, companies from G7 countries provide around 90 percent of the transport insurance that is so important for the oil trade worldwide.
The EU is also an important player in the sea freight business in other respects – and Russia has so far been heavily dependent on the West.
Expert: "New shipping market is emerging"
This could change now.
The head of the Russia Institute at London's King's College, Adnan Vatansever, told Der
Spiegel
that Russia's shadow fleet could consist of at least 100 used tankers, mostly from Iran and Venezuela, which are also under Western sanctions.
The two countries have been operating in this way for some time in order to sell their raw materials through unofficial channels despite Western sanctions.
The British business newspaper
Financial Times
also reports an oil tanker fleet of around 100 ships, citing data from the energy consultancy Rystad.
There are buyers for the Russian oil with China and India, especially in Asia.
Experts therefore expect the spread of a parallel market: "A new type of shipping market is emerging, parallel to the normal, compliant market in which most of us operate," Lars Barstad, CEO of the tanker owner Frontline, told the American Wall Street Journal
.
In addition, Russia appears to be using cover-up tactics when exporting oil.
The
Financial Times
reports .
According to research by the business newspaper, a Russian oil tanker was broadcasting false positions to cover up its whereabouts even before the oil embargo came into force.
Cases have also been reported of Russian oil being transferred from one tanker to another at sea and mixed with oil from other countries to make it impossible to identify where the raw material came from.
Oil export is one of Russia's main sources of income
Putin will be extremely keen to keep his oil business going.
The export of the raw material is still one of Russia's main sources of income.
If he doesn't succeed in building up a parallel business with his shadow fleet, things could get tight for him financially.
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In addition, the scope for action is becoming ever narrower: Since there is insufficient insurance cover without complying with the oil price cap, Turkey refuses oil tankers to transit through the Bosporus without the appropriate certificate - just like the pilots in the Danish straits between the North Sea and Baltic Sea.
In other words, Russia can no longer export oil via the Baltic and Black Seas on these routes unless it adheres to the West's price cap.
With material from the dpa
