Fresh high for non-G7 tankers lifting Russian crude amid tightened sanctions

Russia lifted the share of its seaborne crude exports on non-G7 tankers to a fresh high in November, with Western authorities ramping up their sanctions enforcement.

Data from S&P Global Commodities at Sea and Maritime Intelligence Risk Suite suggested 84.2% of Russia's seaborne crude 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.

The proportion, a jump from 75.2% in October, was the highest since December 2022 -- when G7 members and their allies banned maritime services for Russian crude exporters unless the oil was sold for no more than $60/b to undermine Russia's war chest against Ukraine. The previous high was 83.8% in September.

The development came as the UK and US blacklisted dozens of "shadow" tankers transporting sanctioned oil in recent months, which critics said are pushing more vessels into the non-G7 axis while having limited impact on Russia's petroleum sales.

The OPEC+ producer tends to use more tankers using non-G7 services, or without services at all, whenever Western governments tighten sanctions, as a ship would generally lose access to G7 services immediately once blacklisted based on industry practice.

On. Nov 25, the British government sanctioned 30 tankers for transporting Russia oil illicitly in its largest sanctions package of this kind to date, bringing the total number of UK-sanctioned oil tankers to 73.

The US has put over 40 tankers on the sanctions list for allegedly shipping Iranian oil this quarter, while CAS data suggests some of them have also been used to lift from Russia.

European lawmakers have called for tougher sanctions enforcement in EU waters and POLITICO reported the bloc plans to more than double the number of oil and gas tankers on its blacklist to 75.

'Marginally effective'

Latest CAS data indicated Russia's seaborne crude exports reached 3.54 million b/d last month, down nearly 5% from October but the second highest in the past five months. CAS analysts attributed the fall to higher domestic refinery runs.

The discount of Russia's flagship Urals crude to Dated Brent, an international crude benchmark, has fluctuated at a narrow range between $12.15/b and $12.45/b since October, according to Platts assessment from S&P Global Commodity Insights.

With India and China emerging as the top Russian oil buyer and willing to receive sanctioned tankers, most of which lacking proper maintenance, think tank Atlantic Council's senior fellow, Elisabeth Braw, said Western sanctions enforcement has "only been marginally effective."

"The importer countries' port authorities let shadow vessels depart without the significant improvements needed to reach the standards set for merchant vessels," Braw added.

Non-G7 tankers were shipping 85% of Russia's crude exports to India in November, the highest this year, and 96% to China, the third highest in 2024, according to CAS and MIRS data.

Meanwhile, liftings of tankers operated by UAE firms -- including overseas affiliates of Russian state carrier Sovcomflot -- jumped to from 24.2 million barrels in October to 32.4 million barrels in November, the highest since the price cap came into force and outperforming their peers in other countries. 93% of last month's UAE shipments were not using G7 services.

But Greek-operated tankers also increased their loadings to a seven-month high of 9.9 million barrels, up from 9.4 million barrels in October and representing three consecutive months of gains, the data suggested.

Tracking international crude weakness, Russia's main export grade Urals has been trading close to the price cap since early September and occasionally below it, offering G7 operators some business opportunities.

The monthly average price of Urals fell from $63.055/b in October to $61.348/b in November, the second lowest this year, according to Platts assessment of FOB Primorsk cargoes with 10-25 days of forward loading.