Since the West imposed restrictions on Russian oil imports due to its invasion of Ukraine, Russia has increased oil supplies to Asia. In international waters surrounding Europe, including outside of UK territorial waters, certain oil products headed for Asia are being shifted from one tanker to another. An investigation by Global Witness and The Independent found that at least two ship-to-ship transfers took place in May off the coast of Suffolk in the UK, outside of UK territorial seas, and that UK-crewed boats assisted the transfers and carried supplies to the tankers.
An area of exceptional natural beauty has been established for the coastline off Southwold, Suffolk. Ben Chapman of The Independent writes that despite this, it is one of the few places in the UK where ship-to-ship transfers are permitted.
Two tankers carrying 165,000 tons of Russian fuel oil worth more than $201 million (£165 million) made the STS transfers of fuel oil off the coast of Suffolk that Global Witness and The Independent reported on.
This oil is being transferred legally. However, tanker-tracking publications and ship-to-ship (STS) transfers throughout Europe are being utilized to reload Russian oil onto ships bound for Asia via the Suez Canal. STS transfers are taking place in different parts of Europe, and new STS transfer “hubs” have appeared recently.
Roslan Khasawneh, a senior fuel oil analyst at the energy analytics company Vortexa, claims that Russia is also shifting its exports of residual fuel oil (RFO), the most well-known product in the world, away from the West and toward Asia, Africa, and the Middle East.
In Greece, where there has been a surge in ship-to-ship transfers, as well as in Egypt, which saw its imports of Russian fuel oil jump to a record 70kbd in June, “Russia’s altering flows are generating new transshipments hubs for Russian RFO. Because of this, Egypt’s fuel oil exports increased to a 10-month high of 120kbd in June, going mainly to Saudi Arabia, according to a study published in July by Khasawneh.
Thanks to increased STS transfers, Russia can ship an increasing amount of its oil quantities to Asia and its primary customers there, China and India. The impact of the planned EU ban on imports of Russian oil and items transported by water, which is anticipated to go into force at the end of the year, and the Western sanctions on Russia’s oil, were significantly mitigated by these actions.
Russian oil shipments defied Western sanctions because Moscow diverted petroleum and products to its eager Asian customers, China and India.
Russian oil shipments fell to 7.4 million BPD in June from 7.4 million BPD in May, according to the International Energy Agency’s (IEA) monthly report for July. Russia’s export profits grew by $700 million month over month on higher oil prices, reaching $20.4 billion, or 40% over last year’s average, according to the IEA estimates, despite crude and product shipments being at their lowest level since August 2021.
Before the EU embargo on seaborne Russian oil imports, European ship owners, particularly private Greek operators, transported a significant amount of Russian oil. Greek tanker owners have boosted their exposure to Russian oil transportation over the past several months as they compete to capitalize on China and India’s rising demand for Russian oil at deeply reduced prices.
Crude and product exports from Russia have not yet been significantly affected. Putin is currently making more money from oil than he did before the invasion of Ukraine or last year, despite somewhat lower volumes, as long as oil prices remain high.
The notion of restricting the price of Russian oil came up due to the West’s primary objective, which was to cripple Putin’s income while still allowing Russian oil shipments around the globe. Suppose Russian oil is purchased at or below a particular price. In that case, the G7 group of major industrialized nations—led by the United States—is considering lifting the prohibition on insurance and all services that allow shipping Russian oil.