SUPERNEWS

Macro

Sanctions Snarl Russian Crude, Tankers Idle Off India

Two Russian oil tankers idle off India for weeks, highlighting sanctions-induced disruptions and shifting global trade dynamics.

By Mackenzie Crow

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3/18, 15:17 EDT
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Key Takeaway

  • Two tankers carrying 700,000 barrels of Russian Urals crude each have been idling off India's West Coast for over three weeks due to unclear reasons, hinting at the impact of Western sanctions.
  • The sanctions targeting traders and shipping companies have previously disrupted tanker movements, with a significant backlog of Russia’s Sokol crude observed.
  • Despite disruptions to Sokol crude shipments, Urals deliveries have remained relatively stable until this recent incident.

Disruption in Russian Oil Shipments

Two tankers, the Aframax tanker Crude Centurion and the Afragold, carrying Russian flagship Urals crude have been idling off the West Coast of India for over three weeks, signaling potential disruptions due to Western sanctions. These tankers, which loaded about 700,000 barrels of Urals from the Russian Baltic sea port Primorsk in January, have yet to unload, with no clear indication of when they will do so. This situation underscores the broader challenges facing the fleet of tankers moving Russian oil amidst heightened US sanctions targeting traders and shipping companies.

Sanctions Impact and Market Adjustments

The sanctions have particularly affected Russia’s Sokol crude, with a backlog of as much as 18 million barrels earlier this year, as Indian refiners shunned the grade. However, this backlog is clearing, with cargoes now heading to China, indicating a shift in trade flows and buyer preferences. Despite these challenges, shipments of Urals have been relatively undisturbed until the recent idling of tankers. The management of these tankers, by firms such as Universal Tanker Mgmt UTM-MAI and Stealth Maritime Corp, has come under scrutiny, with difficulties in communication and comment due to public holidays and non-operational contact numbers.

Shifting Trade Dynamics

The redirection of Russia’s Sokol crude from India to China highlights the evolving dynamics of the global oil market in response to sanctions. Chinese private refiners, or teapots, have emerged as rising importers of the grade, comparing Sokol against another Russian grade, ESPO. Offers for Sokol supplies are being floated at competitive rates against other grades, indicating a strategic adjustment by Russia to find new buyers amidst tightening sanctions. However, hesitance from Chinese entities regarding vessels caught up in the latest round of US sanctions has snarled cargo discharges, reflecting the complexities of navigating the current geopolitical landscape.