One year after it implemented a set of limits on European participation in the Russian oil trade, the EU has added new measures intended to bring more transparency to tanker sales and STS transfers involving Russian interests.
The implementation of the EU/G7 "price cap" mechanism restricted the ability of Western tanker owners and insurers to continue serving Russian clients. Oil priced above $60 per barrel would have to travel aboard non-Western vessels, insured by non-Western underwriters. Evasion began immediately through several mechanisms, like masking tanker movements, camouflaging cargo origins through multiple STS transfers, and obscuring the true oil sales price by charging extraneous fees.
After the public price of Russian Urals climbed past the $60 mark this summer, these transactions became harder to justify. Instead, Russia has turned to a "dark fleet" of older non-Western tankers - anonymously owned, flagged in open registries and insured by non-International Group underwriters. The sale of secondhand vessels to this fleet brought windfall profits for many European owners.
This undercover tanker fleet may now be plateauing in size. According to prominent British broker Gibson, secondhand prices for older tonnage have been declining recently, "perhaps a sign that Russia has sourced adequate tankers" for the purpose of circumventing the G7 price cap.
Now that a Russian-serving "dark fleet" has been created, the European Council has agreed to new measures to document it. The Council has introduced "notification rules" for foreign sales of tankers in order to make these export transfers transparent. The measure is aimed at the sale of used ships that could be used to evade sanctions on Russia.
The council is also tightening up its rules for price cap compliance, and implementing a "strengthened information sharing mechanism" to help identify vessels and companies that are engaging in deceptive practices. This includes new measures to shine light on commonplace subterfuge methods, like ship-to-ship transfers and AIS manipulation.
