Page 5 - FSUOGM Week 18 2022

FSUOGM COMMENTARY FSUOGM

Russia’s new workarounds self-sanctioning in the hope of not being seen as
It’s not just the EU that will be working around a source of support for the invasion of Ukraine.
obstacles, though. Russia will be doing the same (In other words, the evasive manoeuvres were
thing, along with global oil trading networks. not always technically necessary.)
There are plenty of signs that Russia is already Second, there is no indication that Russia has
seeking out alternative avenues for the sale of its been using these workarounds purely as a means
crude. Ami Daniel, CEO of Israel’s Windward of moving petroleum into the European mar-
consultancy, told CNN in late March that the ket. In several cases, Suezmax and Aframax-size
amount of so-called “dark activity” among Rus- tankers that departed the Baltic Sea or the Black
sian tankers – that is, incidents in which ships Sea with Russian oil “for orders” in April have
turn their transponders off for hours at a time – ended up transferring their cargoes to very large
had risen by 600% since the invasion of Ukraine. crude carriers (VLCCs) that then sailed from
Meanwhile, Dow Jones Newswires quoted oil the Mediterranean to South Africa.
traders as saying last month that Russian pro- Meanwhile, there is information to suggest
duction was a key component of certain new that Russia is sending more oil to Asia from the There are
grades of crude that have begun showing up on Baltic and Black Sea than it did prior to the out- plenty of signs
the market this spring. Sellers are offering these break of war (and in some cases, using smaller
new grades – which sport names that reference tankers than is typical for such long-haul voy- that Russia is
former Soviet republics, such as “Latvian Blend” ages). For example, the Suez Canal Authority
and “Turkmenistani Blend” – with the unspo- (SCA) released data earlier this week showing already seeking
ken understanding that they consist partly of that the overall number of ships passing through
Russian crude. the canal had risen year on year in May – and out alternative
Dow Jones Newswires also reported, cit- this makes sense, given that in April 2021, the avenues for the
ing data from TankerTrackers.com, Kpler and canal operator was still coping with the back-
other marine tracking services, that the volume ups caused by the MV Ever Given incident. sale of its crude
of crude oil leaving Russian ports on tankers But the increase in traffic didn’t affect all oper-
“for orders” (that is, without any specified des- ators equally. SCA data show that while overall
tination) had risen to 1.6mn barrels per day traffic rose by 6.3% y/y in April, tanker traffic
(bpd) since the beginning of April. This is, for alone went up by the disproportionate amount
the record, equivalent to nearly one third of the of 25.8% y/y. It’s not at all clear how much of
total volume of oil that Russia exported last year that traffic was Russian oil heading to Asia, as
– 4.7mn bpd, according to data from the Inter- the SCA doesn’t provide full breakdowns of its
national Energy Agency (IEA). data. But in all likelihood, Russian oil cargoes
did account for some of the upswing.
Shifting exports to Asia
Of course, there are a couple of points worth Keeping Europe’s door open
noting here. First, the developments men- Even so, assuming that the EU does introduce
tioned by Windward, TankerTrackers.com et al. sanctions, Russia is not likely to shift every last
occurred at a time when the EU had not placed drop of the oil it has been exporting to Europe
any formal restrictions on Russian oil imports by sea to Asia (and, to a lesser extent, Africa) in
and when European oil traders were only the short term.

(Image: bne/IntelliNews)

Week 18 05•May•2021 www. NEWSBASE .com P5