Half of Russia's sanctioned oil tankers are now standing idle
- Nearly half of tankers sanctioned by the US have failed to load new cargo, Bloomberg reported.
- The West has stepped up efforts to enforce its trade restrictions on Russia, sanctioning 50 vessels.
Efforts to clamp down on vessels breaching Western restrictions on Russia are showing results, with nearly half of sanctioned oil tankers now idle, Bloomberg reported.
Of the 50 tankers targeted by the US Treasury since October, 21 have failed to load on new cargo.
These ships fell into Western crosshairs for trading Moscow's crude above the $60 price cap, a Group of Seven measure implemented to limit Russian energy revenue. Such restrictions took form in response to Moscow's invasion of Ukraine in 2022; additional curbs include caps on refined products.
But the system has faltered since its introduction, as some companies continue ferrying Russian crude above the set price limit. It's partially done through the Kremlin's "shadow fleet," a collective of vessels with hard-to-track owners that circumvent the use of Western insurance and tankers.
To counteract this, the Treasury sanctioned eight individual vessels between last October and December. Before 2023's end, another 24 tankers were added to the list, as the department focused on a shipping company owned by the Russian state-controlled Sovcomflot, Bloomberg said.
The United Arab Emirates-based Hennesea Holdings, owner of 18 ships, was sanctioned in January. And most recently, the Sovcomflot tanker NS Leader was named on Thursday, causing the carrier to reverse course near Portugal and head back toward Russia.
It's a crackdown that's weighing on crude prices, as Russia's Urals crude is sinking toward deeper discounts against Dated Brent. Meanwhile, for tankers still trading, US sanctions have compelled some markets to rethink the imports.
In late January, 10 million barrels of Sokol crude were stuck awaiting delivery to Indian ports, a traditional trade partner. Hardeep Singh Puri, the country's Minister for Petroleum and Natural Gas, recently acknowledged that Russia would need to conform to Western sanctions for trade to happen.
But the US and its allies have yet to dispel Russia's shadow fleet. Recently, a UK sanctions official noted the G7 is making efforts to compel the international community to enforce the price cap, and effectively bring the mystery tankers back into Western fleets.