The UK and EU have agreed to ban insurance for Russian oil cargoes, reports said.
Oil shippers are using several tactics to hide that they’re carrying Russian crude exports, the Guardian reported.
Using China’s yuan instead of the dollar in trading and exchanging weapons or food for supplies are just two.
Russian oil exports bought by India and then re-exported may end up in European gas stations, analysts say.
Oil shippers are using several tactics to conceal that their crude cargoes are from Russia, sources told the Guardian, as Europe and the US try to stem imports.
At the same time, concerns are growing that India, which has snapped up Russian oil at discounted prices, has the potential to be used as a “back door” for those supplies to enter Europe, the Guardian reported Sunday.
One workaround being used to mask the origin of Russian oil is paying in China’s yuan rather than the US dollar, the standard currency for trade, sources told the newspaper. Alternatively, sellers will exchange Russian oil for goods like gold, food or weapons instead of a currency.
Yuan-ruble trading volumes have soared 1,067% since Russia began its war with Ukraine, though this is broadly seen as a sign of the allies strengthening ties to help weaken the influence of the US.
Another masking ploy is to make ship-to-ship transfers of Russian oil on the high seas, which typically involves a Russian ship unloading oil to another vessel from a neutral party. That’s increasingly becoming common practice as a way to hamper tracking and as buyers try to keep quiet any affiliation to sanctions-hit Moscow.
To achieve this, more and more vessels are “going dark” , meaning shippers turn off the tanker’s ID system to make it difficult to monitor its movements.
“If a country or oil operator wants to hide the source of crude or oil products, it can very easily do so,” Ajay Parmar, an oil market analyst at ICIS, told the Guardian.
While trading Russian oil is not illegal, the practice undermines Western allies’ attempts to hamper Moscow’s efforts to fund its war in Ukraine by squeezing the market for its oil. The EU has agreed to ban seaborne Russian oil imports by the end of the year, while the US and UK have imposed their own sanctions measures.
But Greece, Cyprus, and Malta have doubled the quantity of Russian oil they ship since the war began, and Russian oil products are likely ending up in the US after being refined in India, according to reports.
Concerns are mounting that the same is happening in Europe, with India being used as a back door. India and China have boosted their purchases of Russian crude at bargain prices in recent months, and together, they now account for about 50% of Russia’s seaborne oil exports.
Nirmala Sitharaman, India’s finance minister, defended the huge volumes of Russian oil purchases, saying the government is acting in the interest of the country’s economy, the Wall Street Journal reported Monday.
In June, India has bought 1 million barrels of Russian oil a day on average, compared with 30,000 in February, the WSJ noted, citing Kpler data. Those supplies are likely to be refined there, then sent as petrol and diesel elsewhere, to ultimately end up in Europe’s gas stations, some analysts say.
“Indian refiners are clearly taking significant volumes of discounted Russian crude and then re-exporting a material proportion of refined product back out of the country,” Shore Capital analyst Craig Howie told the Guardian.