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Russian oil is being dumped, but more and more under the radar

Russia has increased its oil shipments to major customers in recent weeks, challenging its pariah status in world energy markets. An increasingly popular method of shipping: containers marked “destination unknown”.

Oil exports from Russian ports to EU member states, which have historically been the largest buyers of Russian crude, reached an average of 1.6 million barrels a day in April, according to TankerTrackers.com. Exports fell to 1.3 million a day in March after the invasion of Ukraine. Similar data from Kpler, a raw material data provider, saw flows rise by 1.3 million a day in April, from 1 million in mid-March.

But an opaque market is emerging to hide the origin of this oil. Unlike before Russia invaded Ukraine, oil buyers are concerned about the danger of fame in exchange for the government’s funding of war crimes that Western leaders accuse of war crimes.

More and more oil is being shipped from Russian ports because its destination is unknown. So far in April, more than 11.1 million barrels have been loaded on the ship without a planned route, more than any other country, according to TankerTrackers.com. There was almost no such thing before the invasion.

The use of the label of unknown destination is a sign that oil is being carried and unloaded into larger vessels at sea, analysts and traders said. The crude Russian mixes with the cargo of the ship then blurs where it comes from. It is an old practice that has made it possible to export to countries like Iran and Venezuela.

The ship Elandra Denali was stranded off the coast of Gibraltar last week after receiving three cargoes of oil tankers leaving the Russian ports of Ust-Luga and Primorsk, according to ship operators, transhipment personnel and two ships. companies. Vessel records show that it set sail from the South Korean Incheon and intended to reach Rotterdam, the key refining port in the Netherlands.

New grades of refined products called Latvian Blend and Turkmenistan Blend are also being offered in the market, according to traders, who are understood to have large quantities of Russian oil, they said.

Oil sales to Russia are the basis of the economy and government spending. The country has struggled to sell oil at equal pre-war volumes and prices, causing backlogs in its domestic oil industry.

The United States, the United Kingdom, Canada and Australia have banned imports of Russian oil. The EU is more dependent on Russian energy and imports 27% of its oil from the country. European leaders have also debated whether to impose an embargo, but have yet to act, balancing Russia’s desire to isolate itself without hurting its economies by raising energy prices.

Despite the sanctions, many European energy companies made self-reductions in the weeks following the invasion, as bank banking finances dried up and insurance costs rose. Exports of oil from Russia fell in March, resulting in higher levels of internal storage and lower production at some refineries.

The effects of severe economic sanctions on Russia are already being felt around the world. Greg Ip of the WSJ joins other experts in explaining the importance of what has happened so far and how the conflict can change the global economy. Photo Illustration: Alexander Hotz

The increase in shipments to Europe in April, as well as those marked without a destination, indicates that some companies are finding solutions.

“It would be like saying that the European Union would completely penalize Russian oil by reducing its wages by 40% tomorrow and continuing to live as if nothing had happened,” said UBS Group AG commodity analyst Giovanni Staunovo..

“Meanwhile, there are big discounts on Russian oil. Some people find this environment very appealing. ”

A well-known gross Russian grade known as Ural is being priced between $ 20 and $ 30 from the Brent benchmark, according to traders. Before the invasion, it was usually with a reference or a dollar or two below. Russia has made some deals to sell oil to Indian buyers.

A large part of Russian oil is still being marked with clear destinations in shipping documents. Barrels to Romania, Estonia, Greece and Bulgaria have doubled this month compared to March averages. For the Netherlands, the largest buyer in Europe, and volumes in Finland also rose significantly.

Some buyers are in a hurry to do business in anticipation of possible new cuts, while others say they are making deals before the invasion. Sanctions would force them to break those contracts.

“It suggests that they are buying more than before the invasion, not just because of long-term contracts,” said Simon Johnson, an MIT professor of economics who researches oil geopolitics and a former chief economist at the International Monetary Fund. “It’s also about cheap energy. Until it is fully embargoed, it can move forward. ”

In recent weeks, including major oil and commodity trading houses, Royal Dutch Shell PLC,

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Repsol SA,

Exxon Mobil Corp., Eni SpA,

Trafigura Group and Vitol Group relayed the ships to transport crude oil from Russian Black and Baltic oil terminals to European Union ports, according to Global Witness, a research and promotion team working with the Ukrainian government, and Refinitiv. The goods arrived in Italy, Spain and the Netherlands this month, according to data.

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A Repsol spokesman said the recent shipments were linked to long-term obligations taken before the invasion. Shell, Exxon and Eni say they are transporting oil from Kazakhstan from a Russian port. Trafigura and Vitol did not immediately respond to requests for comment.

Shell said on April 7 that it would stop buying Russian oil from the spot market, but that it was legally obliged to take delivery of crude oil because of contracts signed before the invasion. The company defines refined products as being of Russian origin if the blends contain 50% or more, and will leave the door open for commercial products such as diesel if it contains 49.9% or less of Russian oil.

The Ukrainian government sent a letter to Shell CEO Ben van Beurden on April 13 criticizing the move, saying that “any company will continue to finance Putin’s war machine through an accounting scam.”

“It is a national disgrace to many governments and institutions that are financing these attacks against us,” said Ukrainian President Oleg Ustenko, an economic adviser.

A Shell spokesman said the company’s “restrictive measures imposed by itself now go beyond any EU measures.”

EU officials are drafting a plan for a possible embargo, but are still looking into the timing of the forthcoming French elections and the postponement of Germany. Most likely, an embargo would only be imposed over time. Some are concerned that traders are working on ways to continue to spill oil.

“Even if we see a kind of oil embargo from the EU, will they remember to punish the cisterns? More ship-to-coast transfers far from the coast is a reasonable expectation, ”Mr Johnson said.

– Benoit Faucon contributed to this article.

Write to Anna Hirtensteini at anna.hirtenstein@wsj.com

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Russian oil is being dumped, but more and more under the radar

Source link Russian oil is being dumped, but more and more under the radar

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