Early signs of change as oil cap price breach alters Russian oil and shipping - Lloyd's List

Early signs of change as oil cap price breach alters Russian oil and shipping :: Lloyd's List

Early signs of change as oil cap price breach alters Russian oil and shipping

Vessel-tracking shows readjustments under way to keep oil flowing

Number of Greece-owned, European-flagged and Western-insured tankers calling at Baltic and Black Sea ports dives in first 12 days after Urals crude breaches G7 oil price cap of $60 per barrel

FIRST signs have emerged that the higher Urals oil price is quickly readjusting Russia’s oil export market in the Baltic and Black seas as laden vessels gather off Ust-Luga amid a diminishing number of Western-insured tankers loading cargoes.

The Urals grade of Russian crude surpassed the oil price cap of $60 per barrel on July 12, based on estimates from price reporting agency Argus Media.

That was the first time Urals had breached the cap since it was imposed on December 5.

In the following 12 days, the number of Greece-owned tankers loading from Primorsk comprised 26% of vessels calling by deadweight, compared with 50% averaged over the past 14 months, Lloyd's List Intelligence vessel-tracking analysis show.

Similar numbers were seen for the nearby port of Ust-Luga and Novorossiysk in the Black Sea, alongside a reduction in the number of tankers that are entered with International Group clubs calling at these ports.

Under the price cap, the 12 clubs within the group cannot insure tankers unless they have evidence the cargo was sold at or below the $60 per barrel price.

Four of 16 tankers tracked loading at Primorsk were entered with an IG club over the 12-day period. Five of the 15 that loaded at Novorossiysk were insured by IG clubs.

This contrasts sharply with Lloyd’s List analysis from June that showed two-thirds of tankers that called at the five key export ports in the Baltic and Black Seas had Western P&I cover.

The oil price cap imposed by the Group of Seven industrialised nations and Australia is designed to stem income flowing to the Russian Federation, while, at the same time, keeping exports at a pace that will prevent an inflationary spike in global crude costs.

The days since July 12 are the first real test of its effectiveness, and an early indicator of how shipping markets will be reshaped now the cap has been breached.

The dwindling presence of Greece-owned tankers in Russian markets, which can only load oil price cap-compliant cargoes, shows the higher crude benchmarks could rapidly re-shape shipping and trade flows.

Russian crude exports were assessed at 4.7m barrels per day in June, the lowest since last December, and 2.6m bpd for refined products, according to the International Energy Agency.

There are lucrative premiums for shipowners prepared to ship Russian crude. The Primorsk to West Coast India freight rate was assessed at just over $8 per barrel on July 17, according to Argus Media.

The ‘Russia premium’ comprised 44% of this cost, the price reporting agency said.

There are still European-flagged tankers tracked in the region, although one, the Malta-flagged Sea Luck III ( IMO: 9261619) appeared to sail to the Ust-Luga lightering zone on July 22 and then sail from the area within 18 hours without loading a cargo.

The aframax tanker did not undertake any ship-to-ship transfer, nor change its draft to indicate it was laden after spending a short time in the port zone.

Greece-flagged aframax tanker Nissos Paros ( IMO: 9592290), remains at anchorage at Ust-Luga after loading two days ago, vessel-tracking data shows.

The Primorsk-loaded, Greece-owned suezmax Yannis P ( IMO: 9411343) also sailed to the Ust-Luga anchorage on July 21, joining the Nissos Paros.

Another aframax, the anonymously owned Panama-flagged Kira K ( IMO: 9346720), loaded a few days earlier and is nearly in the region, frequently used for ship-to-ship transfers.

The Malta-flagged Calida ( IMO: 9522128), which arrived at the anchorage 24 hours ago has yet to load, while two other Greece-owned tankers, Minerva Helen ( IMO: 9276561) and Minerva Elpida ( IMO: 9440526) remain at anchor off Estonia in the Gulf of Finland. This is a popular waiting area for tankers awaiting entrance to Russian waters.