Russian crude exports by non-G7 tankers hit new high again; Greeks withdraw

Share of Russian crude exports on tankers not required to operate within the G7's price cap hit a fresh high again in May, with Greek operators exiting the country amid high Urals prices and reports of navy clampdowns.

An analysis of data from S&P Global Commodities at Sea and Maritime Intelligence Risk Suite shows that 79.3% of Russian exports last month were lifted by tankers not flagged, owned or operated by companies based in the G7, the EU, Australia, Switzerland and Norway, and not insured by Western protection and indemnity clubs, versus the previous record of 76.6% in April.

May's share was the highest since December 2022, when the G7 and its allies banned maritime services firms subject to their jurisdictions from facilitating Russian crude exports unless the oil was sold for no more than $60/b to undermine Russia's war chest against Ukraine. The share stood at 47% in November 2022.

With G7 countries tightening sanctions enforcement and Russia's flagship crude, Urals, mostly staying above the threshold since last July, Russia has increasingly turned to tankers operated by opaque owners and state interests to meet its export requirements.

Shipbroker BRS(opens in a new tab) previously estimated such "shadow" ships can sustain Russia's crude exports at 3.5 million b/d. In contrast, the S&P Global analysis showed the non-G7 fleet -- mainly composed of those tankers -- just shipped 2.79 million b/d in May, down from nearly 3 million b/d in April amid overall falls in Russian exports despite the gain in their share.

"It is clear that the oil-price cap...is not working," Vladimir Milov, a Russian opposition politician who once served as a deputy energy minister, said in a research note published by the Atlantic Council. "The G7 countries lacked sufficient capacity and legal authority to monitor the thousands of shipping, trading, and insurance transactions Russian oil-exporters use -- particularly those outside the G7's jurisdiction."

Exit of Greeks

The London-based International Group of P&I Clubs, whose members provide third-party liabilities insurance to over 90% of the global trading fleet, in March estimated roughly 800 tankers withdrew from its coverage so their operators didn't need to comply with the cap.

The large number of withdrawals has prompted widespread worries over potential oil spills and collisions. During the biennial Posidonia(opens in a new tab) industry gathering of shipping professionals earlier this month, Greek shipowner Evangelos Marinakis called on Western governments to take action to mitigate the operational risks for seaborne trades.

"We need to make sure those vessels do not come back online," the chairman of Capital Maritime & Trading Corp. said as the EU finalizes its 14th sanctions package against Russia this month that could includes new measures against shadow tankers.

The remark came as tanker operators in Greece, the EU's largest shipowning nation, saw their shipments of Russia crude fell to 9.1 million barrels in May -- down from 16.7 million barrels in April and the lowest monthly figure since the price cap became effective.

Traditionally holding a market-leading position in Russia's crude export market, Greek operators fell behind their competitors in the UAE, China, Russia and the Marshall Islands amid increased pressure from compliance authorities.

While not directly targeting ships not compliant with the cap, the Greek navy has reportedly been carrying out military exercises since May and ordered ships to leave the Laconian Gulf, a major transshipment hub for Russian oil.

Ship-to-ship transfer volume for Russian crude amounted to 125,000 b/d amid the disruptions in May 1-28, down 149,000 b/d from April's level, according to data from S&P Global Commodities at Sea.

Having lost Europe as its top market since the war, Russian oil exporters have relied on cargo transfers at sea where Aframaxes and Suezmaxes lifted cargoes from western Russian ports for transshipments to VLCCs before further voyages to buyers in Asia.

Crude exports to India, which has emerged as Russia's top customer, fell to a three-month low of 1.61 million b/d in May from a record 2.1 million b/d in April, according to the analysis. The G7 fleet's shipments fell to 585,200 b/d from 413,400 b/d while the non-G7 fleet's decreased to 1.2 million b/d from 1.5 million b/d.