Russia is still using tankers owned by European nations to transport oil despite their price cap, a report has found.
According to the Centre for Research on Energy and Clean Air (CREA), 24% of total Russian crude oil exports were moved by tankers owned or insured by price cap-implementing countries.
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In December 2022, Western nations placed a price cap of $60 per barrel on Russian oil in an attempt to minimise Moscow’s revenue streams after the Russian invasion of Ukraine. The price cap prohibits shipping, insurance and re-insurance companies from handling cargoes of Russian crude around the globe, unless it is sold for less than the price cap. In August 2023, 50% of tankers that were subject to the oil price cap transported crude oil from Russia. Moreover, Russia has assembled a fleet of “shadow tankers” operating without insurance or outside the jurisdiction of countries imposing sanctions.
Isaac Levi, CREA’s team lead for Europe-Russia policy, said in a statement on Tuesday: “More than just by use of ‘shadow’ tankers, the impact of the oil price cap has been undermined by a failure of the participating governments to fully enforce the price cap and punish violators.”
CREA has recommended lowering the oil price cap, increasing monitoring and enforcement of sanctions, and banning hitherto unsanctioned fossil fuels such as liquefied natural gas, liquefied petroleum gas and pipeline fuels that are allowed into the EU. According to the researchers, these measures will more effectively constrict the Kremlin’s war chest.
Off the back of higher oil prices, Russia’s oil revenues rose by 7% in July. Furthermore, Russia’s crude oil exports increased in volume by 50% in the spring, as the state used trade routes with countries without sanctions.
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By GlobalDataThe CREA report suggests that if the price cap was fully enforced, Russia’s oil export revenues would have been reduced by 19% since the cap was announced in December 2022.
