How Europe buys Russian oil bypassing its own sanctions

G7 trade restrictions do not prevent the Old World from saving on “toxic” energy resources

The cost of Russian oil on the world market has exceeded $70 per barrel, as in the best of times, lagging behind the quotations of the international grade Brent by only ten dollars. At this price, domestic exporters sell raw materials not only to “friendly” Asian, but also to “unfriendly” European customers, who previously stated their intention to completely abandon the “black gold” from our country. To all appearances, Western sanctions, which have turned Russian hydrocarbons into a “toxic” commodity, i.e., untradable in the international arena, do not create serious barriers to making deals that are mutually beneficial for both suppliers and buyers of energy resources.

The fact that Western companies are buying Urals above the price ceiling set by the G7 at $60 per barrel is signaled by Bloomberg. Its experts report that up to 40% of ships exporting oil from the ports of the Baltic and Black Seas belong to international firms that are obliged to strictly comply with the marginal level of the selling price of raw materials. But practice shows that the political barriers established by the West are not able to fence off consumers of energy resources of the Old World from economic interest in Russian hydrocarbons. “About half of the ships, before the threshold was crossed, belonged to Western companies. In addition, a significant part of the ships are still insured through London, ”the agency reports.

Bloomberg sources actually shatter the notion that Western companies strictly comply with the sanctions rules established by their own authorities with Russian counterparties. From the point of view of insurance of oil products transport, previously almost completely provided by Western profile companies, the picture is changing right before our eyes, says Sergey Suverov, investment strategist at Arikapital Management Company. The provision of appropriate services is growing from the side of new energy consumers. The amount of insurance payments is still noticeably less than that of European companies that have long been monopolizing the insurance market of maritime cargo carriers. However, the premiums that small companies guarantee for the transportation of Russian oil turn out to be higher than the costs of sea transportation of energy resources purchased by Asian countries in any other producing region of the planet.

“The economies of developing countries require external support, which Russia is ready to provide. Discounts of $10-12 per barrel, which allow Asian buyers to save extra dollars for the development of their industrial economy, can bring double or even triple profits in the future, the expert believes. “The initial cost of “black gold” from our country in the accompanying documents may be lower than the “ceiling” set by the G7, but when selling raw materials at the end point – in Asian or European ports – it may be higher than the required threshold.”

European consumers are well aware that competition with Asian producers may intensify precisely because of cheap supplies of hydrocarbons from Russia, so they are trying to seize the initiative and are looking for an opportunity to continue buying Russian oil at “dumping” prices, bypassing their own sanctions. International traders take risks, earning millions of dollars on such transactions on each lot. “Schemes of supply have long been run in,” a representative of one of the shipping companies, who wished to remain anonymous, told MK. Let’s say a tanker with a deadweight of 100,000 barrels leaves Novorossiysk. The final destination is one of the ports in China or India. The export value of each “barrel” does not exceed the $60 ceiling set by the West. At the same time, the container volumes of the tanker leaving for the voyage are only half filled. Meeting in neutral waters with ships from third countries, for example, from the Middle East, which are not subject to Western sanctions, Russian hydrocarbons are mixed with Arab energy resources by transshipment “from side to side”. At the place of delivery, whether it is Chinese Shanghai, Indian Calcutta, Dutch Rotterdam or Belgian Antwerp, the process of issuing ship documents is carried out on the shore or directly in local trading zones, which are also sometimes considered neutral territory. At the same time, the price of oil, after mixing, naturally turns out to be higher. But formally, nothing illegal happens when agreeing on such contracts: they are endorsed by European customs services, and payment for export goes to counterparties closely associated with Russian suppliers. The deal is being made, but Western sanctions are being circumvented.

According to the leading analyst of the National Energy Security Fund, an expert at the Financial University under the Government of the Russian Federation Igor Yushkov, the fact that Russia continues to earn on oil exports, not only to third world countries, but also to Europe, is reported not by the Russian government, but by the American media . Representatives of the US Treasury said that the sanctions to limit the price of oil from Russia have achieved their goal, reducing Moscow’s income. “It’s true – our national treasury’s raw material revenues have fallen at least twice,” the analyst agrees. “Nevertheless, foreign consumers are not yet able to refuse Russian energy carriers, therefore they are facilitating supplies from Russia by any means, albeit sometimes neglecting their own sanctions restrictions.”