Russia Bypasses US Sanctions, Ships Arctic Oil to India on Blacklisted Tankers

Russia is shipping sanctioned Arctic oil to India using tankers blacklisted by the United States Treasury, testing Moscow's ability to circumvent aggressive measures imposed earlier this month.

Sanctioned Tankers Carry Oil

Three shipments of sanctioned Arctic oil are en route to Indian ports on tankers designated by the Treasury on January 10. Additionally, at least two cargoes from Sakhalin Island are also reportedly en route to India after being transported on US-listed vessels.

India's Conditional Acceptance

India has indicated it will only allow sanctioned tankers loaded before January 10 to enter its ports, provided they arrive by February 27. However, all five current shipments were collected after January 10.

Impact on Moscow's Output

Moscow's ability to maintain oil flows is crucial for the country's ability to sustain output levels. Failure to circumvent sanctions could lead to a surplus in the global oil market this year.

Current Flow Trends

So far, there is no clear reduction in Russian oil flows since the sanctions were imposed. A four-week rolling average of shipments observed by Bloomberg shows minimal change in the past seven days, albeit at low levels.

Pacific Exports

Shipments from Sakhalin Island appear to be heading towards India after being handled by sanctioned vessels. The Pavel Chernysh and Viktor Konetsky, both blacklisted, initially listed India as their destination. The Viktor Konetsky has since transferred its cargo to an unsanctioned vessel, with its final destination unclear.

Unsanctioned Vessel Availability

Moscow is seeking unsanctioned vessels to transport its key Asian grade ESPO from the port of Kozmino. Only one of 19 vessels loading ESPO since January 10 has been sanctioned.

Increased Flows to Turkey

Crude flows to Turkey have surged since the sanctions announcement, reaching their highest levels since the 2022 invasion of Ukraine.

Export Value

Russia's export value increased by $50 million to $1.43 billion in the week to January 26, partially due to increased exports.

Asian Flows

Observed shipments to Asian customers remained stable at 2.57 million barrels per day in the four weeks to January 26, with China accounting for 920,000 barrels per day. Flows to India averaged 1.36 million barrels per day.

European Exports Cease

Seaborne crude exports to Europe have ceased, with Turkey remaining the only short-haul market.

Weekly Monitoring

This article is part of a weekly series tracking Russian crude exports and their value. The next update is scheduled for Tuesday, February 4.