At the end of the year, Russia loses its largest oil customer with the EU. A replacement seems to have already been found: countries like India are stocking up on cheap oil. Officially for domestic supply, but with a veiled origin, it ends up in the EU and USA despite sanctions.
Russia has already significantly reduced gas deliveries to Germany and other EU countries. By the end of the year, Ukraine's European partners will also have to look for alternatives to Russian oil if they want to implement their embargo. And Russia needs new buyers in other parts of the world.
But they seem to have been found: South Africa is considering buying cheap Russian oil to combat rising fuel prices. And China imported more oil from Russia in May than ever before. According to the Chinese customs authorities, almost two million barrels arrived in the People's Republic every day.
India is also happy about the cheap offer. As recently as January and February, Indian refineries weren't importing any oil from Russia at all, in May it was suddenly around 819,000 barrels a day - and at a bargain price: Western companies have been avoiding Russian oil since the beginning of the war, oil giants like Rosneft are only getting rid of their barrels when they offer discounts of up to 30 percent.
One reason why India didn't buy any Russian oil just a few months ago was the high transport costs. As a rule, it is loaded onto tankers near St. Petersburg. From there it goes via the Baltic Sea, North Sea and Mediterranean Sea around the EU to the Suez Canal and past the Arabian Peninsula. In the Gulf of Karachi, the tankers dock on the west coast of India. A trip takes about 40 days.
But that was once: By the end of May, India is said to have bought a total of 62.5 million barrels of Russian oil. The interest comes as no surprise, as the subcontinent is the world's third largest oil consumer after the US and China. The government in New Delhi defends the imports as important in order to ensure security of supply. In addition, they import less oil in a month than Europe does in an afternoon.
According to Reuters, about half of the oil ended up in large refineries owned by industrial group Reliance or oil company Nayara Energy, which is half-owned by Russian giant Rosneft. But they are only intended to partially satisfy India's thirst for oil: apparently the Russian discounts are so lucrative that they prefer to resell the oil. The Finland-based Center for Research on Energy and Clean Air (CREA - Center for Research on Energy and Clean Air) makes this accusation.
Since the beginning of the war, energy experts have observed how energy exports are financing the Russian attack on Ukraine. In their analysis, they found that Reliance or Nayara Energy ship more than half of their imports abroad as supposedly "Indian" gasoline or diesel after the crude oil has been processed in their refineries. According to this, every fifth tanker heads for the Suez Canal. This suggests that the customers are located in Europe or North America. According to their own statements, researchers in Helsinki have already been able to prove deliveries to France, Italy, Great Britain and the USA.
Data from the analysis company Kpler, which analyzes the world market for raw materials, suggests that the accusation is correct: According to this, Indian refineries exported 15 percent more fuel abroad in the first five months of the year than in the same period last year, as was reported in a Reuters report is called. The reporters quote a senior executive at an Indian refinery: "We make more than $30 for every barrel of oil that we process and sell abroad for fuel."
The fact that Russian oil flows via India to Europe is actually forbidden. However, the hands of the EU, the USA and their allies are tied to a certain extent: the Indian government is taking a neutral stance in the conflict and is not supporting the sanctions. And to prove that in the tankers of Reliance, Nayara and other fuel products from Russia are difficult.
But the system has a weak point, as the energy experts from Finland report: significantly more tankers are needed for the long transport routes from Russia to India and back to Europe than for the previous Russia-Europe business - and most of them are in Western hands. In April and May, about two-thirds (67 percent) of Russian oil was shipped by tankers registered in Europe or the US. Three out of four deliveries to India or the Middle East were even made by Greek ships: Greek shipowners operate the world's largest fleet of tankers.
A monopoly that the EU could exploit - at least in theory. In May, the heads of state and government decided to ban imports of Russian oil by sea. They also wanted to ban ships flying the European flag or ships registered in the EU from transporting Russian oil.
However, EU sanctions must be decided unanimously. As reported by ARD, the Greek government has vetoed this because its shipowners earn a lot of money from the transport of Russian oil and a ban would endanger many jobs. It looks like Greek tankers can play the role of oil middleman for Russia and India in the future.
However, another sanction lever that Greece does not control gives hope: European companies are no longer allowed to insure tankers that transport Russian oil to third countries. However, these insurance policies are important for shipowners because they can use them to protect against damage to the ship and cargo. Most importantly, they are mandatory in almost all coastal nations to cover the costs of collisions or oil spills.
Fortunately for the EU, most shipping insurers are based in Europe: 97 percent of all tankers transporting Russian oil are insured in Great Britain, Norway and Sweden, according to the energy analysts in Helsinki. The heart of the industry beats at the London company Lloyd's. And as the "Financial Times" reports, the EU and Great Britain are working together on the insurance ban despite Brexit.
At first glance, the regulation is a hit. Without insurance, ships with Russian oil on board run a high financial risk if they are even allowed to call at their destination port. Nevertheless, some experts doubt the effectiveness of the ban.
Because it has to be proven that Russian oil is actually being transported. This requirement is already crumbling, as Indian deliveries to Europe and the USA show. And it will continue to crumble as more and more tankers disguise their origins by turning off their GPS signals and offloading the oil to another ship on the high seas -- this is how Iran, North Korea and Venezuela have been evading Western oil sanctions for years.
There are also shipping insurers outside of Europe, as Jan Blumenthal, head of Lloyd's Germany, explains. The insurance ban will not prevent the Russian President from getting rid of his oil, says Blumenthal on ARD. "He will sell his oil on Asian markets. Accordingly, the transport on Asian markets will be insured by Asian insurers."
However, other experts believe these concerns are exaggerated. They point out that Chinese technology companies are also complying with the technology sanctions against Russia for fear of secondary sanctions, although they do not have to. According to this, international insurers find themselves in the same situation: Do they want to give up possible business in Europe or in the USA in order to be able to insure Russian oil transports?
The same applies to shipowners, a consulting firm from the shipping industry explains in a "Politico" article: Would they really risk 60 million barrels of oil on the international market in order to be able to ship two million from Russia? The answer of an industry expert is clear: "I don't think that's an attractive offer."
