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Tankers with Russian oil are idling in Indian Ocean: reports

Two tankers carrying Russian flagship Urals crude have been idling off the West Coast of India for more than three weeks, reported Bloomberg, noting that there was no indication as to when they would eventually unload.

Aframax tanker Crude Centurion (IMO 9436020) arrived at the West Coast of India on February 21st, about 100 miles away from Sikka, its destination. Another, the Afragold, had been floating nearby since February 29th after briefly signalling Mundra as a destination. Both loaded about 700,000 barrels of Urals from Russian Baltic sea port Primorsk in January. It cannot be stated for sure why the two vessels have been idling but there were growing signs that western sanctions were disrupting the fleet of tankers moving Russian oil (see story above).

Since the US ramped up its sanctions rules, several tankers idled in the Indian Ocean for days before either discharging the crude in Indian ports or diverting to Middle East.

Russia’s Sokol crude was hit hardest by tightened sanctions, but the backlog finally has been easing, with most tankers deciding to head to China instead. Shipments of Urals have been relatively undisturbed.

Afragold is managed by a firm called Universal Tanker Mgmt UTM-MAI, according to the Equasis international maritime database. Bloomberg said that a Malta phone number listed for the company didn’t work.

However, despite the restrictions, maritime consultancy Drewry said that the Russian crude trade was expected to continue at discounted prices.

According to Drewry, since October 2023, the US has sanctioned more than 40 tankers involved in Russian crude trade for breaching the $60 per barrel price cap, including 14 associated with Russia’s state-owned (and already sanctioned) Sovcomflot, as a result reducing vessel availability for its crude exports.

Drewry identified two potential scenarios for how things could go for its crude exports.

The first would see Russia sticking to the price cap, increasing cargo availability for non-sanctioned vessels. Drewry noted that India, which in the early months of 2023 became a significant buyer of Russian crude oil after the G7 price cap, might continue importing Russian crude, provided it was sold for under $60 per barrel on non-sanctioned vessels.

“[India] has been benefiting from lower prices after Europe banned Russian oil imports. The South Asian country imported about 1.66 mbpd of Russian oil in 2023 compared to 0.65 mbpd in 2022. The threat of losing a major buyer like India might force Russia to absorb the higher transportation cost by offering a deeper discount on crude prices,” Drewry said in its analysis.

The second scenario would see Russia exploring alternative options for its oil, possibly relying on the ‘shadow fleet’, consisting mainly of tankers over 15 years old, and with levels of insurance that have been causing concern to littoral states. Drewry emphasized that this approach was likely to be met with resistance, as countries like India were now reluctant to buy crude on sanctioned vessels. However, if Russia finds buyers for its crude above the $60 price cap, the demand for the ‘shadow fleet’ could increase, which would negatively impact the crude tanker market.

“Drewry believes Russian crude trade will continue unabated at discounted prices as the ongoing sanctions will make it difficult for Russia to evade the price cap. The crude tanker market will thus benefit from the Russian crude trade on vessels without any sanctions,” Drewry concluded.