Russian military vessels are escorting oil tankers traversing the Gulf of Finland, Finland’s defense minister told media this weekend, saying this was “a completely new development.”
The news follows an attempt last week by the Estonian navy to stop a tanker carrying Russian oil, which prompted the appearance of a Russian fighter jet.
Due to European sanctions and the G7 price cap, Russia is using what the media likes to call a shadow fleet of tankers, often aging, and insured by parties outside the Western world. These vessels “make use of flags of convenience and intricate ownership and management structures while employing a variety of tactics to conceal the origins of its cargo, including ship-to-ship transfers; automatic identification system blackouts; falsified positions; transmission of false data; and other deceptive or even illegal techniques.”
The European Union has been trying to disrupt the shipment of Russian crude abroad on these tankers, mostly through the G7 price cap, whose effectiveness has been, to put it mildly, arguable. The UK recently sanctioned a number of vessels for engaging in the transportation of Russian crude oil but this has not stopped the flow of Russian oil abroad.
Europe’s latest idea was to propose lowering the price cap for Russian oil that can be insured by Western companies, from $60 per barrel to $50 per barrel. This is still considerably higher than the price cap that Ukraine’s president insisted on, which was $30 per barrel, but lower than the original cap that the G7 agreed in 2022.
A recent report by Finland-based think tank Centre for Research on Energy and Clean Air suggested that sanctions on the shadow fleet are more effective than price caps, citing a decline in Russia’s use of shadow fleet tankers in April, from 81% in January to 65%.
Source: By Charles Kennedy from Oilprice.com