Russia boosts crude exports on non-G7 tankers by 30% amid sanction clampdowns

Russia hiked seaborn crude exports on non-G7 tankers by 30% in May, a dramatic reversal from recent trends amid some of the largest Western sanctions enforcement to date.

Last month, 2.95 million b/d of Russian seaborne exports were loaded by ships not flagged, owned or operated by companies based in the G7 and their allies, and not insured by Western protection and indemnity clubs, or 80.9% of total volumes, according to S&P Global Commodities at Sea and Maritime Intelligence Risk Suite data.

This compared with 64.1% in April and was the highest in six months.

Russia's flagship crude export grade, Urals, has traded below the price cap of $60/b on a free-on-board Primorsk basis in recent months according to Platts assessments, which in principle allows G7-based tanker firms to lift those Russian barrels legally.

But some industry participants said G7-based tanker firms could be feeling chilling effects from large-scale sanctions in recent weeks, partly because the difficulties in validating the actual cargo sale prices.

"Some shipping companies just decided not to trade in Russia and rerouted their vessels" due to the legal "complication," said one of them.

The concerns emerged as the EU added 189 ships to its sanctions list last month, the bloc's largest enforcement action of its kind to date, while the UK sanctioned 128 ships in two rounds of sanctions.

The EU and UK have also been pushing to lower the price cap to $50/b for Russian crude in a recent G7 meeting, a measure that has been so far resisted by the US, according to media reports.

Washington has been seeking to broker an end to the Russia-Ukraine war so could be unwilling to tightening sanctions, but the stance could quickly shift amid volatile geopolitics, according to shipbroker BRS.

"If Washington's patience was to run out, there remains the likelihood that it could once again take a tough line and introduce further sanctions," BRS said in a recent note.

Tanker operators in Greece, Europe's largest shipowning nation, loaded 11.1 million barrels of Russian crude onto their ships last month, down from 17.5 million barrels in April and the lowest in four months, according to CAS and MIRS.

Shadow fleet

Russia's total seaborne crude exports rose to 3.6 million b/d in May from 3.5 million b/d in April, suggesting the OPEC+ member had no trouble maintaining oversea sales by turning to non-G7 tankers that were mainly from the shadow fleet.

The number of crude and product tankers used to transport sanctioned oil has reached 940, making up 17% of total capacity globally, according to a joint study by S&P Global Commodity Insights and Market Intelligence. This compared with 591 in April 2024

With China and India, the world's two largest crude importers, willing to receive sanctioned tankers under many circumstances, some industry participants said Western sanctions have not undermined Russia's war chest against Ukraine but created safety issues for the industry.

Rolf Thore Roppestad, CEO of Gard, the world's largest marine insurer for third-party liabilities, said "simple math suggests sanctions will never work" because two-thirds of the global oil demand comes from countries willing to buy Russian oil -- far above Russia's share in total production.

"There is no point introducing sanctions that don't work," Roppestad said at the TradeWinds Shipowners Forum Norway 2025 earlier this month.

Shadow fleet operators have continued to acquire aged ships in secondhand markets, but South Asian scrap dealers are unwilling to recycle their ships due to worries over Western sanctions. Many shipowners said the development leads to an overhang of old ships on the waters, resulting in heightened safety risks.

"Sanctions against Russia are not working," but Western politicians want to "make a point" due to Russia's invasion of Ukraine, Frontline CEO Lars Barstad said. "The political cost of not sanctioning Russia is too big."