INCREASE IN THE RISK STATUS OF THE GLOBAL TANKER FLEET One of the key findings is that a substantial amount of the tankers entering the ghost fleet are older tankers that, in usual circumstances would usually be scrapped. Now that considerable premiums can be earned in the ghost fleet, why scrap them? This in turn has led to an increase in the risk status of the global tanker fleet as demonstrated in diagram 1 from Windward.
Multiple Dubai based entities have been seen in recent months purchasing up tankers, at a significant premium on behalf of the Kremlin. The majority of these purchases involve tankers which are over 15 years old and would be expected to be scrapped in the next few years according to Anoop Singh, Head of Tanker research at Braemar. Ship-to-ship transfers have also increased dramatically as shown by figure 2 from Windward.
Windward have also flagged that there has been a substantial increase in the
number of tankers leaving Russian ports on aimless or illogical voyages to the mid North Atlantic, just outside of the EU’s jurisdiction and then becoming dark ships by turning off their tracking and returning to their home ports considerably lighter on the draft. Figure 3 from Bloomberg demonstrates the changes in the Russian shipments post sanctions.
According to David Wech, Chief Economist of Vortexa, there is no indication that Russia will have to cut back on its export of crude or refined products in a substantial way although Putin has announced that Russian oil production will be cut back by 500k barrels per day in March. Almost all Russian crude is going to China and India at heavily discounted prices with refined products also popping up in the Middle East, Africa and South America. Turkey and Morocco for example have heavily increased their purchases of Russian refined diesel.
The trade shift has been unsurprisingly swift. At the start of 2022, European
buyers took 89% of Russian crude out of ports in western Russia with India barely taking any. Move to the start of January 2023 and around 85% of shipments are heading to ports in India with only 6% remaining in the Mediterranean. Figure 4.
Depending on which source is used to quantify the numbers of the Kremlin’s shadow fleet, it will then depend whether it is deemed sufficient or insufficient for their export requirements. Sanctions evasion have always been a speciality for the Kremlin and something that has been performed for years since the Soviet times. Time will tell for the eventual outcome but one thing is for certain, the commodity colossus that is Russia will not be disappearing anytime soon.
Dominic Enston Account Executive Grains and Oilseeds Derivatives Broking E:
dominic.enston@admisi.com T: +44 (0)20 7716 8477
ACCORDING TO DAVID WECH, CHIEF ECONOMIST OF VORTEXA, THERE IS NO INDICATION THAT RUSSIA WILL HAVE TO CUT BACK ON ITS EXPORT OF CRUDE OR REFINED PRODUCTS IN A SUBSTANTIAL WAY.
6 | ADMISI - The Ghost In The Machine | Q1 Edition 2023
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