US sanctions on Russia’s oil-shipping firms may leave India at sea
Washington is slowly but steadily cutting the umbilical cord that links Russian oil to India — shipping. The US, on Friday, unleashed the largest sanctions package, partly directed at Sovcomflot, Russia’s state-owned shipping behemoth, and on 14 of its vessels, which are some of the biggest carriers of Russian oil to India regularly.
Since January 2023, the newlysanctioned tankers have transported around 68 cargoes to India, equivalent to around 6 per cent of the total Russian crude imports last year.
That’s approximately 48 million barrels of oil, more than what Nigeria, a key crude oil supplier to India before the Ukraine war, supplied in 2023, according to calculations based on data conducted by market intelligence agency Kpler.
Some of the ships are en route, carrying crude to India. For instance, Georgy Maslov is scheduled to discharge a 621,000 barrels parcel of Urals at Reliance’s Jamnagar port in early March, according to Kpler data.
It is unlikely that Indian banks will process payments for crude carried on a sanctioned vessel, a state-refining official said, leaving the fate of the cargo in uncharted waters.
NS Captain, another sanctioned vessel, is supposed to deliver cargoes in March and April to Vadinar port, where Rosneftowned Nayara Energy owns a refinery. Anatoly Kolodkin is scheduled to deliver cargo in April at Sikka port. Washington is chipping away at the so-called shadow fleet that transports oil to China, India, and Turkiye, among others. The latest missive came on February 23, when the Office of Foreign Assets Control, under the US Treasury Department, accused Sovcomflot vessels of transporting crude oil over and above the G -7 mandated price cap of $60 a barrel.
Targeting ships seems to be
working. Since Washington escalated sanctions in December, first targeting Dubai-based Sun Ship Management, a Sovcomflot unit, Russian supplies to India have averaged around 1.5 million barrels per day.
It compares to over 2 million b/d in July and 1.7 million b/d in
November. India will not accept crude shipped on sanctioned vessels, top Indian officials said.
The country receives crude from Russia on around 45-50 vessels every month, according to Vortexa data.
Indian state-run refining officials told Business Standard that it was unfair on the part of the US to impose sanctions without prior notice because there have been occasions when a tanker leaves the port it is not under sanctions but midway through the month-long journey to India an enforcement order materialises, forcing Indian refiners to reject the cargo, fearing reprisals from Washington.
In December and January, around 10 vessels, belonging to Sun Ship and Hennesea Tankers, carrying a premium Sokol crude grade had to turn back from India because of the sudden sanctions imposed by the US in December.
The timing of such enforcement actions, the latest one announced to coincide with the second anniversary of Moscow’s invasion of Ukraine, also comes amid the rising attacks on tankers in the Red Sea by Houthi rebels carrying crude to India.
Two vessels have been attacked in the past month.
“With the shipping capacity shortage that Russia is already facing thanks to the US cracking down on price-cap busting, Moscow can ill-afford to reroute its crude via Cape of Good Hope in South Africa,’’ said Singapore-based energy expert Vandana Hari.
More than 50 oil tankers have come under Washington’s sanction net over the last six months.
In February, Washington imposed sanctions on nearly 20 vessels, owned by Sovcomflot, NS Leader Shipping, and Dubai-based Oil Tankers SPF Mgt.
In January, it slapped sanctions on Hennesea Holdings, and 18 vessels. Aggressive enforcement of sanctions began in September and gained steam in December when Sun Ship, which on its website says that it owns 92 tankers, was marked. But some of these vessels have appeared under different ownership in the last few months, documents from Russia and ship tracking data showed.
Despite the sanctions against vessels, Russian crude oil exports to non-fsu countries averaged 4.6 million barrels per day (bpd) from October 2023 to January 2024 marginally lower from 4.61 million bpd in January-september 2023, before the first sanctions against vessels were imposed, Uk-based market intelligence provider Energy Intelligence said.