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HomeWorldEuropeEU Countries Facilitating Circumventing Oil Sanctions Against Russia: New Report Reveals

EU Countries Facilitating Circumventing Oil Sanctions Against Russia: New Report Reveals

EU Countries Facilitating Circumvention of Oil Sanctions Against Russia, Report Finds

A new report has found that EU countries are facilitating circumventing oil sanctions against Russia on a grand scale.

Greek-Owned Ships Transporting a Significant Portion of Russian Oil Shipments

Greek-owned ships in particular stand out, and have transported nearly a third of all Russian oil shipments between December 2022 (when the oil cap was implemented) and the end of July.

“Shadow” Tankers Responsible for Majority of Russian Crude Flows

Over the past months, media reports have suggested a fleet of “shadow” tankers, which are owned and insured in countries not implementing the price cap, were chiefly responsible for transporting Russia’s oil.

On Monday (25 September), the Financial Times found 75 percent of seaborne Russian crude flows travelled without Western insurance in August. This marked an increase from about 50 per cent this spring, according to data from commodity analytics company Kpler — which suggests Russia is becoming more successful at circumventing the price cap.

Russia Still Relying on EU Vessels to Cheat Sanctions

Analysis by the Centre for Research on Energy and Clean Air (CREA), a Finnish think-tank, broadly supports these findings but uses a wider data set spanning eight months since the price cap was implemented in December 2022.

This indicates that Russia is still “heavily reliant” on EU vessels to cheat sanctions and sell oil on the global market to finance their war machine.

“Shadow” Tankers Responsible for Significant Volume of Russian Crude Oil

According to Equasis shipping data, so-called “shadow” tankers, nearly half of which are registered in the United Arab Emirates (UAE), are responsible for transporting 37 percent of Russia’s total exported volume of crude oil.

While significant, the report states that as of July, 58 percent of Russia’s oil was still being transported by countries that are supposed to impose the price cap, which includes the G7, the EU, Norway, Switzerland and Australia, down 20 percent since January this year.

Sanctions Reducing Russia’s Revenues, But Weak Enforcement Allows Revenue to Stay Up

Previous CREA analysis revealed that sanctions have helped to reduce Russia’s revenues by more than €160m per day, reducing Russia’s crude oil export earnings by an estimated 32 percent in December 2022.

But an “excessively high price cap level” of $60 [€56] per barrel and weak enforcement is keeping revenue up.

Russia Plans Defense Spending Increase, Fueled by Oil and Gas Revenues

Russia is reportedly planning a massive increase in defense spending next year, partly financed through an expected quarter increase in oil and gas revenues of 11.5 trillion roubles [€112bn] in 2024.

“The huge profits the Kremlin is still receiving from its oil exports are fuelling the war in Ukraine and have enabled about 100,000 registered war crimes,” said Svitlana Romanko, director of the Ukrainian climate and peace group Razom [We Stand].

“Shadow” Operations Perception Exaggerated, Weak Monitoring and Enforcement

The report’s authors also note that the perception of Russia’s control over “shadow” operations is often exaggerated in the Western media, which has aided Russian president Vladimir Putin in creating a “false narrative.”

“If Russia had a ‘shadow fleet’ to transport all of its oil without having to comply with sanctions, it would mean that the oil price cap could be fully circumvented and therefore totally ineffective. This is not the case,” they write.

The shadow fleet is instead owned by many countries and there is scarcely any proof Russia has any centralized control.

Greek Shipowners Selling Ships to Anonymous Buyers Linked to Russia

Instead, a recent investigation by Foreign Policy found that Greek shipowners themselves are selling their old ships for juicy prices to anonymous buyers linked to Russia, most of whom are based in the UAE, followed by buyers in China, Turkey, and India.

Failure to Enforce Price Cap and Punish Violators Risks Sanctions’ Effectiveness

The biggest risk to the effectiveness of the sanctions, according to Isaac Levi, an energy analyst at CREA, is “the failure of the participating governments to fully enforce the price cap and punish violators.”

Even when crude oil prices coming from the Urals exceeded the cap limit of $60 [€56] per barrel, ships owned or insured in EU countries continued to transport Russian oil, indicating that the rules are poorly monitored and enforced.

Levi argues that enhanced monitoring and a lower price cap of $30 [€28] per barrel, down from the current $60 [€56], could still severely hamper the Russian war machine.

Had the lower cap been implemented in December, he estimates it would have been able to slash Russian revenues by $44bn in the eight months since sanctions were introduced, which corresponds to 47 percent of the total export value.

Urgent Need to Tighten Sanctions Against Russian Blood Oil

“There is an urgent need to tighten sanctions against Russian blood oil and all those who profit from it,” said Romanko.

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Sallie Anderson
Sallie Anderson
Sallie works as the Writer at World Weekly News. She likes to write about the latest trends going on in our world and share it with our readers.

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