FSUOGM: How Russian oil is sidestepping sanctions

Russia’s oil trade has gone dark. What once was a transparent and vibrant market is now an opaque, poorly reported, network of secret transfers, ghost ships without transponders and dodgy deals at unreported prices reminiscent of the early 1990s.

Thanks to sanctions and the G7 oil price cap scheme the benchmark Urals price has become increasingly meaningless, as it is the price paid for oil sent to Europe, and volumes along that route are collapsing. Both the Central Bank of Russia (CBR) and Ministry of Finance have already abandoned the Urals price for calculating when oil revenues should be siphoned off into the National Welfare Fund (NWF) or used to calculate oil revenue taxes respectively.

Mid-ocean ship-to-ship transfers between vessels with no flag and unknown owners have become the norm. New crude cocktails of blended Russian oil are sold in ports and banned Russian crude is making its way back into Western markets after the transubstantiation of refining in Indian, Chinese, African and other refineries scattered around the globe.

It’s not an exaggeration to say that almost all of Russia’s international oil business is now operating outside the Western sanctions regime.

If you’d like to read more about the key events shaping the former Soviet Union’s oil and gas sector then please click here for NewsBase’s FSU Oil and Gas Monitor.