Increase in Russian oil exports to China via ‘obscure’ ship-to-ship transfers
- According to Vortexa, the amount of Russian oil involved in “dark” ship-to-ship transfers has increased.
- Russian ships are increasingly turning off their trackers and unloading their crude on ships bound for China, he said.
- Sanctions on Russia following the war in Ukraine have led to higher levels of secrecy in global oil markets, analysts say.
The amount of Russian oil involved in “dark” ship-to-ship transfers has risen sharply in recent months as Western sanctions drive greater secrecy in global crude markets and a redirection of supplies to Asia.
According to Vortexa, the volume of Russian crude flowing through these transfers reached 182,000 barrels per day in the first 18 days of July, up dramatically from 44,000 barrels per day in June. The vast majority of oil goes to China, the commodity data firm told Insider.
In a ship-to-ship transfer, one ship unloads its cargo into another while at sea. When such a transfer is “dark”, it means that at least one ship has disabled the tracking signal that allows the authorities to see where he is.
Vortexa analysts said the ships left Russia loaded with the country’s oil, headed for the Atlantic, and then unloaded their cargo on other vessels.
The growth in secret transfers is part of a general increase in secrecy in global oil markets following Russia’s invasion of Ukraine in late February.
Western sanctions against Russia have deterred companies in the international economy from dealing with the country’s products. The United States and the United Kingdom have banned the import of Russian oil, while the European Union plans to phase it out soon.
As a result of sanctions and “self-sanctions” by European companies, Russia has redirected its crude oil exports to Asia. In particular, India and China are snapping up Russian oil, which is trading at a discount on international markets.
According to data from Vortexa, as of Monday there were four Very Large Crude Carriers – or VLCCs – currently loaded with Russian crude heading to Asia, having picked up their cargo from another vessel in the Atlantic.
Lloyd’s List, a shipping industry newspaper, said this week that five “aged” Chinese vessels have been at the center of recent ship-to-ship transfers of Russian crude in the Atlantic. Commodities data firm Kpler told Insider it was also seeing dismal transfers, amid an increase in exports to Asia from pre-war levels.
The reasons China takes Russian crude via ship-to-ship transfers are somewhat difficult to understand, said David Wech, chief economist at Vortexa.
“India just takes as much rough as they want, they don’t care,” he told Insider. He said the sanctions do not prevent India or China from buying Russian crude.
However, Wech said Chinese and Russian companies could practice, in case tougher sanctions are put in place.
Chinese companies might also want to avoid damaging their reputations, he suggested. Last month, the top US energy adviser urged India to limit its purchases of Russian oil and avoid damaging its international position.
Wech said China’s major state-owned enterprises are not involved in the hidden transfers, which are largely carried out by recently founded small independent companies.
Vortexa said last week that tankers that previously carried sanctioned Iranian crude are increasingly carrying Russian oil. He also said that Russia, Iran and Venezuela – all countries suffering under the weight of US sanctions – are increasingly in competition to sell their oil to India and China.