Sovcomflot maintains its share of Russian non-G7 oil exports at 80%.

Despite Western sanctions, Sovcomflot retains a significant share of Russia's non-G7 crude oil exports, exceeding 80% in August. New U.S. sanctions increase pressure to reduce Russian revenues.

Share:

Tanker Sovcomflot

Russian crude oil exports continue to evolve under the pressure of Western sanctions.
In August, Sovcomflot, the Russian shipping operator, maintained its share of crude oil exports outside the G7 sanctions framework at 81.5%.
These exports are mainly destined for India and China, two countries that do not follow the restrictions imposed by the United States and its allies.
Data from S&P Global Commodities at Sea and Maritime Intelligence Risk Suite show that Sovcomflot carried 20.9 million barrels in August, compared with 12.8 million in July, despite increasing logistical and financial challenges.
On September 2, 2024, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) imposed sanctions on three additional Sovcomflot vessels.
These vessels, managed by companies based in the United Arab Emirates, were accused of using U.S. services to transport Russian crude oil above the $60-per-barrel cap, in violation of rules established by the G7 coalition and its partners.
This action adds to ongoing US efforts to limit Russian oil revenues and increase pressure on operators involved in the Russian oil trade.

Adapting to Sanctions and Circumvention Strategies

Western sanctions, such as the ban on shipping services for Russian oil sold above $60 per barrel, have forced Sovcomflot to adopt circumvention strategies.
In response to these sanctions, Sovcomflot has moved some of its vessels under the management of companies based in the United Arab Emirates, enabling them to evade certain restrictions.
Recent additions to the sanctions list show that the US authorities are ready to target all entities that facilitate evasion of the price ceiling rules.
According to an analysis recently published by the US Treasury, these reinforced sanctions force Russia to sell its oil at prices lower than those on the world market, thus limiting its financial resources.
This new phase in the sanctions strategy aims to further constrain Russia while minimizing disruption to the global energy market.
The price of Urals oil on an FOB Primorsk basis stood at $67.204 per barrel in August, while ESPO crude on an FOB Kozmino basis reached $71.625, both above the G7 ceiling.

Consequences for the Global Tanker Market

The predominance of non-G7 tankers in the transport of Russian crude has implications for the global tanker market.
The new US sanctions demonstrate Washington’s ongoing commitment to maintaining market stability while reducing the profits Russia uses to finance its military operations.
The United States, in collaboration with its coalition partners, will continue to strengthen its monitoring and sanctions enforcement measures in the weeks and months ahead.
Since the price cap came into force, the average age of tankers carrying Russian oil under sanctions is 16.5 years, compared with 13.3 years for those complying with the price limits.
This indicates a gradual aging of the fleet, potentially leading to higher operating costs in the long term.
In August, some 81.5% of Russian crude oil exports were carried by tankers not associated with the G7 countries, the European Union, Australia, Switzerland and Norway, nor insured by Western protection and indemnity clubs.
This proportion, although slightly down on July (82.7%), remains high, indicating the complexity of Russian adaptation to international sanctions.

McDermott secures contract worth up to $50 million with BRAVA Energia to install subsea equipment on the Papa-Terra and Atlanta oil fields off the Brazilian coast.
Saudi Aramco increases its oil prices for Asia beyond initial expectations, reflecting strategic adjustments related to OPEC+ production and regional geopolitical uncertainties, with potential implications for Asian markets.
A bulk carrier operated by a Greek company sailing under a Liberian flag suffered a coordinated attack involving small arms and explosive drones, prompting an Israeli military response against Yemen's Houthis.
The Canadian government is now awaiting a concrete private-sector proposal to develop a new oil pipeline connecting Alberta to the Pacific coast, following recent legislation intended to expedite energy projects.
Petrobras is exploring various strategies for its Polo Bahia oil hub, including potentially selling it, as current profitability is challenged by oil prices around $65 per barrel.
Brazilian producer Azevedo & Travassos will issue new shares to buy Petro-Victory and its forty-nine concessions, consolidating its onshore presence while taking on net debt of about USD39.5mn.
Major oil producers accelerate their return to the market, raising their August quotas more sharply than initially expected, prompting questions about future market balances.
Lindsey refinery could halt operations within three weeks due to limited crude oil reserves, according to a recent analysis by energy consultancy Wood Mackenzie, highlighting an immediate slowdown in production.
The flow of crude between the Hamada field and the Zawiya refinery has resumed after emergency repairs, illustrating the mounting pressure on Libya’s ageing pipeline network that threatens the stability of domestic supply.
Libreville is intensifying the promotion of deep-water blocks, still seventy-two % unexplored, to offset the two hundred thousand barrels-per-day production drop recorded last year, according to GlobalData.
The African Export-Import Bank extends the Nigerian oil company’s facility, providing room to accelerate drilling and modernisation by 2029 as international lenders scale back hydrocarbon exposure.
Petronas begins a three-well exploratory drilling campaign offshore Suriname, deploying a Noble rig after securing an environmental permit and closely collaborating with state-owned company Staatsolie.
Swiss commodities trader Glencore has initiated discussions with the British government regarding its supply contract with the Lindsey refinery, placed under insolvency this week, threatening hundreds of jobs and the UK's energy security.
Facing an under-equipped downstream sector, Mauritania partners with Sonatrach to create a joint venture aiming to structure petroleum products distribution and reduce import dependency, without yet disclosing specific investments.
Dalinar Energy, a subsidiary of Gold Reserve, receives official recommendation from a US court to acquire PDV Holdings, the parent company of refiner Citgo Petroleum, with a $7.38bn bid, despite a higher competing offer from Vitol.
Oil companies may reduce their exploration and production budgets in 2025, driven by geopolitical tensions and financial caution, according to a new report by U.S. banking group JP Morgan.
Commercial oil inventories in the United States rose unexpectedly last week, mainly driven by a sharp decline in exports and a significant increase in imports, according to the US Energy Information Administration.
TotalEnergies acquires a 25% stake in Block 53 offshore Suriname, joining APA and Petronas after an agreement with Moeve, thereby consolidating its expansion strategy in the region.
British company Prax Group has filed for insolvency, putting hundreds of jobs at its Lindsey oil site at risk, according to Sky News.
Orlen announces the definitive halt of its Russian oil purchases for the Czech Republic, marking the end of deliveries by Rosneft following the contract expiry, amid evolving logistics and diversification of regional supply sources.