Western Tankers

Russia’s Crude Oil Finds New Path to Market as Oil Prices Slump

A slump in oil prices is allowing Russia’s crude to be carried on tankers owned and insured by western companies, helping tighten the market for those ships around the Atlantic basin.

Oil Prices Tumble, Russia’s Crude Finds New Path

Oil prices have tumbled since US President Donald Trump imposed sweeping tariffs on US trade partners earlier this month. That has driven Russia’s key Urals grade well below the US$60-a-barrel price cap Western powers imposed on it in response to the 2022 invasion of Ukraine.

Russia’s Shadow Fleet

When prices were above that threshold, Russian crude couldn’t be carried on tankers owned, insured, or using other services provided by western companies. That forced Russia to ship oil on mostly older vessels, owned by little-known companies based in jurisdictions far from the reach of western authorities and often carrying substandard insurance.

Market Changes

That so-called shadow fleet has hauled most of Russia’s crude exports since the price cap was introduced in December 2022. Alongside Russia’s own ships, it still hauls almost all exports from Moscow’s Pacific and Arctic ports. But the pattern is changing at key outlets in the Baltic and Black Seas.

Russia typically ships 60 to 70 cargoes of crude a month from its Baltic and Black Sea ports, and the share hauled on western-owned or insured tankers has soared as oil prices have fallen, reaching 43 per cent of the vessels that have already loaded, or been booked to load, this month.

Conclusion

The slump in oil prices has created an opportunity for Russia to transport its crude on tankers owned and insured by western companies, tightening the market for those vessels in the Atlantic basin. This shift has significant implications for the global oil trade and the companies involved.

FAQs

Q: What is the current price of Russia’s key Urals grade?
A: The price of Russia’s key Urals grade has fallen below the US$60-a-barrel price cap Western powers imposed on it in response to the 2022 invasion of Ukraine.

Q: How many cargoes of crude does Russia typically ship from its Baltic and Black Sea ports?
A: Russia typically ships 60 to 70 cargoes of crude a month from its Baltic and Black Sea ports.

Q: What is the share of vessels that have already loaded, or been booked to load, this month that are hauled on western-owned or insured tankers?
A: The share has soared as oil prices have fallen, reaching 43 per cent of the vessels that have already loaded, or been booked to load, this month.

Q: What is the impact of this shift on the global oil trade?
A: This shift has significant implications for the global oil trade and the companies involved.