Russia turns to G7 tankers for crude exports; Greek shipments at 10-month high

Russia turned to non-sanctioned tankers using G7 services to maintain its crude exports last month, supported by the return of Greek firms amid weak Urals prices and US rapprochement.

G7 member states and their allies have banned the provision of maritime services to tankers transporting Russian crude unless the oil was sold for $60/b or below, but observers suggest the price cap regime could fragment after the US unilaterally began peace talks with Russia.

In February, 24.4% of Russia's seaborne crude exports were lifted by tankers flagged, owned or operated by companies based in the G7, the EU, Australia, Switzerland and Norway, or insured by Western protection and indemnity clubs, S&P Global Commodities at Sea and Maritime Intelligence Risk Suite data shows.

That was up from 19.9% in January and the highest in four months, suggesting the OPEC+ producer was able to rely on G7 tankers after dozens of ships in its shadow fleet were sanctioned by Western authorities earlier this year. Total Russian exports reached around 3.2 million b/d in February, little changed month over month.

This development came as Russian companies often discounted their flagship grade, Urals, below the price cap, effectively allowing G7-linked tankers to lift their cargoes legally in Russia.

Urals has been trading below $60/b on an FOB Primorsk basis since Feb. 21 and was assessed at $54.47/b on March 5, the lowest since mid-2023, according to Platts, part of S&P Global Commodity Insights. The monthly average was $60.281/b in February, the weakest since July 2023.

While many European and US shipping companies have voluntarily withdrawn from Russian tanker trades due to reputational risks after Russia invaded Ukraine in February 2022, industry participants have suggested Greek companies would generally be willing to continue their loadings within the cap.

Tanker operators based in Europe's top ship-owning nation lifted around 375,000 b/d of Russian crude last month, up from 358,000 b/d in January, the highest in 10 months, according to CAS data.

Among the non-G7 fleet, mainly composed of ships controlled by Russia to bypass the price cap, Seychelles-registered firms loaded 507,000 b/d and Hong Kong-registered companies 499,000 b/d in February—they were the only ones with a larger presence than Greek firms.

"I believe the Greek tanker entrants now are a mix of the Urals prices and a change in the direction of political winds from the US," said Byron Mckinney, trade finance director at S&P Global Commodity Insights Market Intelligence.

Geopolitical factors

The US Treasury, under the previous Biden administration, sanctioned more than 150 oil tankers to undermine Russia's war chest against Ukraine on Jan. 10, while the EU blacklisted 72 such ships and the UK sanctioned 40 on Feb. 24 in similar efforts.

The enforcement led to some disruptions to Russian oil exports. CAS data shows five of the 13 crude cargoes loaded by sanctioned tankers on Jan. 11-31 are still at sea. Information on discharge terminals is not available for six of the eight completed shipments.

But US President Donald Trump, sworn in on Jan. 20 for his second presidency, has embarked on peace talks with Russia without directly involving Ukraine and the EU, and easing Russian sanctions could be part of a truce agreement.

Washington has been much more effective in enforcing the price cap due to the US dollar's dominant current status, and the UK and EU might struggle to keep up the pressure on Russia on their own, according to industry officials.

"The price cap will be the most prominent set of sanctions to be scrutinized and potentially diluted ... I cannot see Europe enforcing to the level it has done prior to Trump," Mckinney said.

"Russia will want assurances from the US on the price cap that what is agreed upon is not going to be hindered by other regions/countries, including Europe," he added. "My belief is what US-Russia agrees via peace talks will become standard in Europe."