A backlog of tankers is growing near Russia’s key oil port of Kozmino, the latest sign of disruption being wrought on the nation’s exports by sweeping U.S. sanctions.
On Jan. 10, the outgoing Biden administration designated 161 oil tankers along with vital traders and vessel insurers involved in the Russian export program. Oil futures surged as the market digested the supply implications of the move.
There are now nine oil tankers idling near the Russian Pacific port, the nation’s largest individual crude-export facility. While there are normally a few waiting at any one time, the number doing so now is bigger than normal, traders and shippers who monitor the exports said. A further 11 vessels are either approaching or have recently left.
History shows that U.S. sanctions have bitten the tankers that move Russian oil hard. Traders and shipping officials who monitor exports from the port said that if that’s the case at Kozmino, then Moscow may struggle to find enough shipping capacity.
Traders are looking for any signs of disruption to Russia’s crude oil and fuel flows, which on a combined basis, were neck-and-neck with those of Saudi Arabia as the world’s biggest seaborne export program last year. There are wider signs of disruption — from u-turning vessels to buyers looking elsewhere for supply.
Even before the Jan. 10 measures, the Chinese port of Shandong had warned companies there to be cautious in dealing with sanctioned barrels. Several Asian oil traders said they believe it’s possible blacklisted vessels may get shunned by buyers at the facility, which is home to millions of barrels a day of oil processing.
Likewise, a senior official in India, Russia’s other key buyer, warned almost as soon as the measures were announced that designated tankers would be barred. The ban excludes cargoes collected before Jan. 10 and delivered before March 12.
From December to Jan. 10, ESPO exports that loaded throughout the period was supported by 27 tankers, according to a Bloomberg analysis. The traders and shippers said any shortage of the vessels could create bottlenecks, slow down loading and exporting from Kozmino, and ultimately force Moscow to restrict flows.
The only tanker sanctioned by the U.S. on Jan. 10 that has subsequently loaded a cargo of ESPO crude is the Li Bai. It remains anchored off Kozmino after completing loading operations on Saturday, tracking data show.
Separately, the sanctioned Zaliv Baikal took on a cargo of Sakhalin Blend crude from the Sakhalin 2 project on Jan. 11. It completed offloading it at Lianyungang on Sunday, in a move that would appear to breach the sanctions.
Of the ten unsanctioned tankers near ESPO, Sai Baba had previously handled other Russian grades, such as Urals that load from Primorsk, Ust Luga and Murmansk, but hadn’t previously touched ESPO since the Russian war.
Others may also be rushing to Kozmino to help relieve any logistical challenge, possibly joining the fleet supporting flows as it faces a crunch that has sent chartering rates soaring. Last week, Bhilva u-turned in the Indian Ocean and is approaching the Strait of Malacca after briefly signaling its destination as Kozmino.
With your current subscription plan you can comment on stories. However, before writing your first comment, please create a display name in the Profile section of your subscriber account page.