Can the West push the price of Russian oil exports to third countries below the $60 ceiling? The measure will take effect even before it comes into force. But the Kremlin has already invested billions in a "shadow tanker fleet."
In China, there are increasing signs that the government is relaxing its tough corona measures and that the economy could pick up again. At the same time, Opec and Russia have decided to keep oil production and thus supply on the global oil market at a low level. The expected consequence of these developments: The world market prices for crude oil rise significantly at the beginning of the week. However, one producing country is not benefiting from the price jump of around three percent at times: the price of Russian Urals crude oil even fell minimally to 60.60 US dollars.
This is almost exactly the upper limit to which the EU, the G7 and Australia are pushing the price of Russia's most important export good with their recently decided price cap. The cap is intended to prevent the Kremlin from ultimately benefiting from sanctions such as the partial EU oil embargo that has now come into force, which are actually intended to harm the aggressor in the Ukraine war. In addition, the Western economic powers want to prevent the already weakening global economy from being dragged deeper into the crisis.
According to the embargo that was decided in June and has now come into force, Russian crude oil may no longer be imported into the EU by ship. Exceptions apply to oil imported by pipeline. Above all, Hungary, the Czech Republic and Slovakia, which are heavily dependent on Russian pipeline oil, want to use this exemption. However, the fact that the other Western industrialized nations now have to replace the sometimes considerable quantities of oil previously imported from Russia with other suppliers could shake the world market and drive up prices. Poorer countries would suffer particularly from this. Russia, on the other hand, could probably sell less oil, but higher prices might offset the loss.
That is why the western states do not want to try to prevent Russian oil exports as completely as possible. With the combination of import bans in their own countries and the price cap for global trade in Russian oil, Russia should continue to be given an incentive to sell oil on the world market without the Kremlin benefiting from the crisis triggered by its own war of aggression.
In order to enforce the price cap worldwide, the G7 want to rely on their market power in oil transport on the world markets. Companies from the G7 countries alone currently insure around 90 percent of global maritime trade. The largest shipping companies in the world also come from EU countries. They are still allowed to transport, insure and provide other services for Russian oil for export, but only if the price paid for the transported oil does not exceed $60 per barrel.
"We have clear signals that a number of emerging countries, especially in Asia, will respect the principles of the cap," said the EU representative of AFP. Russia is already being "pressured" by its customers to give them discounts. That he is right is supported by the fact that the Urals price had already fallen towards $60 in the days before the EU embargo and the price cap came into force and did not participate in the current price jump.
However, Russia has repeatedly emphasized that it will not submit to this price dictate under any circumstances. According to the Reuters news agency, the Russian government is preparing a decree that will ban domestic companies and traders from doing business with countries and companies based on the upper limit.
According to a report in the Financial Times, Russia is also building a gigantic fleet of tankers so that it is no longer dependent on Western companies for oil exports. The newspaper reports, citing the ship broker Braemar, that Russia has probably bought more than 100 used tankers this year, including 29 supertankers alone, each of which can transport more than two million barrels of oil. The buyers of the ships are unknown or partially anonymous companies in the industry, it is said. It is obvious that these ships are mostly destined for Russia.
It is true that neither the Russian state nor Russian companies are involved in the construction of this fleet, which, according to "FT", is referred to in the industry as the "shadow fleet". The Russian Deputy Prime Minister Alexander Novak, among others, has already spoken of the need to expand oil transport capacities in the past. According to "FT", Andrei Kostin, head of the state bank VTB, called for Russia to spend "at least one trillion rubles" (around 15 billion euros) to expand its tanker fleet.
