Russia likely doesn't have enough ships to maneuver its oil around a G7 price cap, S&P Global says

• Russia likely won't have enough ships to move its oil around a price cap, S&P Global said.
• That's largely due to increased competition for ice-class ships, which are necessary for long voyages.

Russia likely doesn't have enough ships to maneuver its oil around a G7 price cap, S&P Global warned in a note on Tuesday.

That could spell trouble for the nation's crude exports, with the European Union ban on Russian oil set to fully kick in by December – just as G7 nations are working toward a cap on crude prices.

Russia has said it would retaliate against such a measure by refusing to sell oil to any country that imposes a price cap, and has scrambled to find ways to reroute its oil, such as building a fleet of special tankers to skirt supplies around sanctions.

But it needs enough to redirect a whopping 3.5 million barrels of oil a day, and will likely fall short by around 110 tankers, S&P Global said, citing estimates from the brokerage firm Braemar. That calculation is assuming Russia will conduct more ship-to-ship transfers, which disguises the origin of Russian oil by handing off supplies to non-Russian ships.

The shortage is largely because of the increased competition for ice-class ships amid the energy crisis, S&P analyst Fotios Katsoulas said, which are necessary to make the long-distance voyages once sanctions kick in. Already, purchases for secondhand ice-class ships rose to $1 billion this year, five times what was spent in 2021, according to data from London-based shipbroker EA Gibson.

"The market experiences more demand for shipping, primarily driven by the shift in trade flows as a response to the European sanctions on Russian cargoes and with the insurance ban approaching," he added, predicting supply would only grow tighter into winter.

But some say rerouting most Russian oil is still possible, with one US Treasury official stating that Russia could still access enough tankers to export up to 90% of its oil supplies. Braemar noted Russia could potentially access a shadow fleet of ships that are mainly being used for sanctioned trades with Iran and Venezuela. That could add over 200 various ice-class ships to Russia's arsenal, although firms would have to compete for sanctioned trades to use those ships.