Page 6 - FSUOGM Week 05 2023

FSUOGM COMMENTARY FSUOGM

narrow going forward as the logistics of ship- highest for exports out of Baltic and Black Sea
ping Russian oil get worked out. A rise in global ports, while it is likely lower in the Pacific and the
oil prices would add further impetus for the G7 Arctic, where western-owned oil tankers play a
price cap to bind. At this stage, however, it is too smaller role.
soon to make a full assessment of the effective- The growing “shadow fleet” is also cause for
ness of the G7 cap,” says Brooks. concern going forward, according to IIF, as it
A central issue is compliance with the cap, affords Russia the means to export oil outside the
even if the $60 level has not currently been G7 price cap mechanism. Greek shippers have
breached, says Brooks. “Given the legal and been particularly co-operative with Russia and
reputational damage that comes with violating increased their share of oil carried from 35% pre-
the G7 cap, our assumption is that virtually all war to some 55% now. Moreover, Greek shipping
Western-owned oil tankers operate under the G7 companies have been selling their oldest tankers
price cap mechanism,” Brooks adds. to Russia bolstering its shadow fleet capacity.
On average, Western-owned ships constitute “One avenue Western policy makers may
around 50% of Russian seaborne crude, but there want to explore is a ban on the sale of West-
is wide variation across key exit points from ern-owned oil tankers to Russia, to prevent the
Russia, according to IIF. Compliance is likely shadow fleet from growing further,” says Brooks.

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