A growing number of tankers carrying Russian oil are remaining at sea off the coast of eastern China, as U.S. sanctions disrupt established supply routes and force Moscow to seek alternative buyers. The congestion began to build after Washington sanctioned Russian energy giants Rosneft and Lukoil in late October, with the full package of restrictions coming into effect on November 21.
Market data show that since August, the volume of Russian oil remaining at sea has increased by more than 20%. At the same time, transport times for the key ESPO crude blend from the Kozmino terminal to Chinese ports have lengthened significantly. In November, the average voyage exceeded 12 days, compared with just over eight days in August. Following the announcement of sanctions, state-owned refiners Sinopec and PetroChina suspended purchases, sharply curbing Russian oil exports to China.
The situation differs on the Indian route, which—according to preliminary trade data—has proven more resilient to sanctions than previously expected. Russian oil deliveries to India in December are set to exceed 1.2 million barrels per day and could approach 1.5 million barrels per day by the end of the month. Continued imports reflect, among other factors, decisions by state-run refiners Indian Oil Corp and Bharat Petroleum to resume purchases from non-sanctioned suppliers offering discounts of around $6 per barrel relative to Brent.
At the same time, signs of activity by Russia’s so-called “shadow fleet” are becoming increasingly evident. Vessel-tracking data indicate that some tankers disappear from monitoring systems near the Riau Archipelago close to Singapore—an area known for ship-to-ship oil transfers. Additional such operations have been recorded there in recent weeks, with some vessels transmitting incomplete or false information regarding their flag state.
Sanctions are also exerting strong downward pressure on Russian oil prices. ESPO crude is being sold to some independent Chinese refiners at discounts of $7–8 per barrel to Brent, among the widest spreads seen this year. Meanwhile, the price of Urals crude from the port of Novorossiysk fell to around $38 per barrel in early December, with the discount to Brent widening significantly.
In the Indian market, sanctions have led to increasingly divergent refining strategies. Private conglomerate Reliance Industries has reduced imports of Russian oil to export-oriented facilities in order to avoid jeopardizing relationships with Western markets. At the same time, state-owned refiners and Nayara Energy—partly owned by Rosneft—have increased purchases, taking advantage of deeper discounts. Russia is also relying on volume-swap mechanisms in the domestic market, which helps sustain exports to India but adds further logistical complexity and extends the time cargoes spend at sea awaiting discharge.
Source: managerplus.pl
