The Daily View: More of the same
ALL sanctions are equal, but some sanctions are more equal than others.
For the past 17 packages of sanctions the EU’s approach to Russia has failed to make much of an impact beyond raising the collective blood pressure of European shipping operators, lawyers and insurers.
Its list of sanctioned ships has grown impressively (444 since Friday), but the designations have had almost no impact on the tradability of the target vessels or the flow of Russian crude.
The targeted vessels are always several steps ahead of the Brussels infighting that slows down these efforts, and they have generally exited European insurance and broking networks long before the big reveal emerges with a whimper via the FAQs or legal texts.
A further fragmentation away from US and G7 sanctions is unlikely to worry those who carry Moscow’s discounted crude then. Or will it?
While a newly lowered price cap for the EU and UK, but not US or any of the rest of the G7 makes things more complex, is it really going to dissuade either the price cap-compliant Europeans, or the flag-hopping shadow fleet from doing what they are already doing?
Well, yes, and no.
The EU’s price cap cut potentially has the teeth to impact which ships carry Russian crude in the future. Maybe.
The whole point of the price cap is that it allows Russian oil to flow below the cap and there’s a significant portion of Russian exports being carried by Greek owners entirely in compliance with the rules.
Unless there is a significant swathe of Greeks currently planning to skirt those rules, those owners will likely have to exit the Russian trade by mid-October once the 90-day grace period ends.
That reshuffle of shadow fleet and mainstream trading will likely hurt Russian volumes, at least temporarily while the readjustment happens.
Longer term, however, we’re likely back to more of the same.
Unless, of course, there is a shift in the US where sanctions come with consequences, at least theoretically.
President Donald Trump had been making noises that he was ready to sign a punishing Russia sanctions bill that imposes a 500% tariff on countries that buy Russian oil.
At that point the detail of how low the price cap goes becomes a long-forgotten detail, but the 50-day ultimatum he has given Moscow currently looks like a green light to finish off a summer offensive in Ukraine before facing any consequences.
Meanwhile, expect another round of shadow fleet flag-hopping, tanker identity reassignment operations and, possibly a minor blip in the availability of Greek shipowners to profit from Russian oil liftings.
Richard Meade
Editor-in-chief, Lloyd’s List
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