Bloomberg: Oil Exports From Russia’s Busiest Port Unencumbered by Sanctions

Oil exports from Russia’s main Pacific terminal remain steady as shippers and traders – once again – circumvent a new batch of US restrictions by bringing in a new list of vessels to keep barrels moving, Bloomberg reports, UNN writes.

Details

Between January 30 and February 16, none of the sixteen tankers loading ESPO crude from the eastern port of Kozmino were included on the US sanctions list after Washington expanded restrictions early last month, according to Bloomberg and Kpler. Half of them are new to handling local ESPO crude, the data show.

Oil traders are closely watching Russia’s ability to continue to supply oil to world markets, and direct talks between the Trump administration and Moscow in Saudi Arabia on a possible settlement in Ukraine are raising questions about whether sanctions could be eased. Flows from Iran – another US target – have been equally resilient, despite renewed threats to tighten measures, the publication points out.

Since late January, many vessels that were new to the ESPO trade have been sailing under so-called “convenience” flags, including those of Panama, the Cook Islands, Sierra Leone and Djibouti, the data show. All but one of ESPO’s cargoes were bound for China – popular destinations include Dunyin, Huizhou, and Dongjiakou. Most of the vessels are owned by companies registered in Shanghai, Hong Kong and the Seychelles, according to Equasis.

Freight rates on the Kozmino-Asia route did indeed rise sharply after the latest US sanctions – among the most recent from the Biden administration – and then came to a standstill, the newspaper writes. Currently, the fee is about $5 million for a three- to five-day voyage to China, according to ship brokers and a Chinese private refinery. This is up from $1.5 million before January 10, but less than the peak.

Addendum

Meanwhile, according to Bloomberg , the Group of Seven is considering collectively tightening or adapting the price ceiling on Russian oil in an attempt to cut Moscow’s revenue while the war in Ukraine continues.

A draft statement seen by Bloomberg shows that the G7 countries could instruct their finance ministers to collectively review the price ceiling – currently set at $60 per barrel of oil – that was put in place to limit the Kremlin’s access to petrodollars. The move would be part of an effort to increase the cost of the war in Ukraine to Russia in order to “encourage it to negotiate a meaningful peace,” the newspaper writes.

At this point, it is unclear how much support all G7 countries have for the document in its current form, and it is likely to be revised as diplomats continue to discuss the text. The so-called zero draft also mentions “troops and resources on the ground, combined with credible international supervision to monitor the agreed lines.

The G7 is scheduled to issue a statement on February 24, the three-year anniversary of Russia’s invasion of Ukraine.

The draft states that the allies “recognize” Ukrainian President Volodymyr Zelenskyy’s “readiness” for “negotiations to end the war,” while warning that Russian dictator Vladimir Putin’s terms of peace “are still tantamount to Ukraine’s complete surrender.” The draft states that the allies plan to meet with Zelenskyy on February 24.

According to the draft, the allies will call for a “common sense peace that is just, a peace that will last” that will include “lasting security guarantees.

The allies will stick to their line that any talks to end the war “must include Ukraine’s full participation” and leave it open to achieving Euro-Atlantic integration.

“It is difficult to say what the tightening or adaptation of the restriction will look like in practice. While a lower price may be one option, another could be an attempt to tighten enforcement of the current measure,” the publication notes.

According to the newspaper, the allies at one point doubted that they would be able to issue a statement after the G7 foreign ministers met in Munich for a security conference over the weekend, violating established protocols, according to diplomats familiar with the matter.

The statement from the event ended up being about one-third the length of the previous “zero” draft – also reviewed by Bloomberg – which diplomats said was not approved by U.S. officials.

According to the latest draft of the document, the allies will remain committed to training Ukraine’s security forces and modernizing its armed forces. They will try to counter Russia’s circumvention of sanctions through the use and acquisition of dual-use technologies and its “shadow fleet” of tankers.