Loophole in Russia sanctions: Swiss company ships Putin's oil worth billions

Many European shipping companies have withdrawn from the Russian oil business. New companies are now shipping billions worth of oil across the world's oceans. And make a lucrative business.

Geneva – At the beginning of 2022, the company Fractal Shipping appeared in Geneva – and Russia launched its attack on Ukraine. Since then, the discreet shipping company has shipped three billion Swiss francs (almost 3.1 billion euros) worth of Russian oil across the world's oceans, the Swiss SonntagsZeitung and the Norwegian Dagens Næringsliv reported. And this despite the sanctions imposed by the West, to which Switzerland has also committed itself.

The strictest sanctions have been in place since the end of 2022, prohibiting the import of Russian oil into the US and Europe by sea. Fractal Shipping's business model is therefore: the transport of Russian oil to China, India and the Middle East. Because this is still legal if the price of oil is a maximum of 60 US dollars per barrel. The oil price cap is intended to "cut Russia's revenues even more and limit its ability to wage war in Ukraine," EU Commission President Ursula von der Leyen said in December last year.

Oil tankers in China: Deliveries from Russia to China, India and the Middle East are particularly worthwhile. © Yu Fangping/dpa

Russia is dependent on European tankers

In 2022, Russia earned $58 billion from oil exports by sea, according to research by the Finnish Centre for Research on Energy and Clean Air (CREA). Russia is still dependent on "tankers owned and insured by Europeans," CREA told the Swiss newspaper SonntagsZeitung.

It is true that several major European shipping companies have voluntarily withdrawn from the Russian business. But this is where the new shipping companies like Fractal Shipping come into play. Within a few months, the Geneva-based company bought 27 old tankers worth a total of 550 million Swiss francs. The investment was financed by a "group of investors based in Dubai," Karl Martin Nygaard, one of the managing directors of Fractal Shipping, told Norwegian business newspaper Dagens Næringsliv.

Russian oil: Deliveries to China, India and Co. particularly lucrative

Managing Director Nygaard made no secret of his motivation: The investor group from Dubai "saw an opportunity in the tanker market after the invasion of Ukraine, and so did we." Nygaard continued: "The fact that some companies are sanctioning themselves in their relations with Russia is their problem. But there's nothing obliging other shipping companies to follow suit."

His business model is lucrative: "A trip from Saudi Arabia to Europe, for example, costs just over 2 million dollars, while it costs 10 million dollars to have a cargo of oil transported from Russia to China," explains a shipping insider to the Swiss SonntagsZeitung: With four trips you have financed a tanker, in one year the entire fleet.