The US has introduced a sanctions package targeting Russia’s ‘shadow fleet’ to counteract its evasion of oil embargoes, impacting global oil prices. Following the announcement, North Sea Brent crude prices rose over two percent. The sanctions target outdated tankers and key Russian oil firms, diminishing available shipping for Russian oil. Despite sanctions, Russia’s oil and gas revenue increased significantly in 2024, highlighting its reliance on these sales for budget revenues.
The United States has unveiled a new sanctions package aimed primarily at disrupting the ‘shadow fleet’ that Russia utilizes to bypass Western oil embargoes, which is expected to significantly influence the oil market.
In response to these developments, North Sea Brent crude prices surged by over two percent, reaching $81.50 per barrel (159 liters), marking the highest level since late August. Analysts at Goldman Sachs noted, “Friday’s announcement strengthens our projection that Brent prices will trend upward in the near term, falling within our forecast range of $70 to $85.”
In 2024, approximately one thousand Russian shadow vessels traversed the Baltic Sea, evading sanctions and engaging in controversial activities.
Examining the ‘Shadow Fleet’
The US Treasury’s latest sanctions package specifically targets the ‘shadow fleet’ employed by Moscow to evade international trade restrictions. By utilizing often outdated tankers from less conventional nations, the Kremlin aims to obscure ownership and contractual ties.
Most of the 183 oil tankers directly affected by sanctions are part of this shadow fleet. Matt Wright, a senior freight analyst at Kpler, stated, “These sanctions will considerably diminish the available shipping fleet for Russian deliveries in the short term and elevate freight costs.” In addition to targeting tankers, Washington has also imposed restrictions on two of Russia’s major oil firms, Gazprom Neft and Surgutneftegas.
Of the newly sanctioned vessels, oil tankers that transported over 530 million barrels of Russian crude oil last year represented approximately 42 percent of the nation’s total maritime crude oil exports. Notably, around 300 million barrels were redirected to China, with the remainder going to India, as Moscow shifted a significant portion of its oil exports away from Europe to these nations.
Russia’s Response to the Sanctions
The Russian government has condemned the new sanctions as an attempt to weaken Russian firms through competition-distorting regulations. Kremlin spokesman Dmitry Peskov remarked, “Such actions will inevitably lead to a certain destabilization of international energy and oil markets.”
Peskov emphasized that energy routes that have naturally developed cannot be entirely halted by sanctions, stating that if one avenue is obstructed, alternatives will inevitably arise.
This assertion comes amid concerns regarding suspected sabotage incidents involving underwater cables in the Baltic Sea.
Impact on Fuel Prices and Global Demand
The direct sanctions targeting the ‘shadow fleet’ are evidently affecting established trade routes, prompting buyers to explore alternative sources. According to a representative from the Indian oil refining sector, “Prices for oil originating from the Middle East, Africa, and Brazil have already escalated in recent months due to rising demand from China and India. We have no option but to rely on oil from the Middle East, and we may also need to consider US oil.”
Should Russian supply continue to tighten sustainably, it could lead to increased heating oil and fuel prices in Germany.
Russia’s Oil and Gas Revenue Trends
In spite of international sanctions, Russia managed to boost its state revenue from oil and gas sales last year, with figures for 2024 showing an increase of over 26 percent to 11.13 trillion rubles (107 billion euros), according to government reports. This follows a 24 percent revenue decline in 2023, which was attributed to falling oil prices and reduced gas exports.
For the past decade, oil and gas sales have been a crucial revenue source for the Kremlin, accounting for approximately one-third to half of total federal budget revenues.
This information was reported by Deutschlandfunk on January 13, 2025, at 1:11 PM.