London [UK], January 30 (ANI): Russia has managed to keep its oil moving to world markets, defying fears that sanctions imposed last month would lead to a plunge in exports, the Wall Street Journal said.
A small office in a suburb of Mumbai helps explain how Russian crude continues to flow. WSJ said the address is home to an Indian shipping company that didn't manage a single ship until 2022. The Journal said it took control of two dozen tankers after the Russian military invasion of Ukraine and has put them to shuttling Russian crude along newly established trade routes to the Mediterranean, Turkey and India.
Gatik Ship Management is among the most active of the upstart companies that have snapped up aging oil tankers to replace Western-owned ships no longer dealing with Russia, the Journal said. That parallel fleet is helping Moscow get crude to buyers in Asia, according to shipping executives, brokers and vessel-tracking, ownership and insurance data, WSJ added.
A person who answered the phone at Gatik's office confirmed that the company managed about 25 tankers. He said he was an employee of a company that is part of the same corporate group as Gatik, according to the report from the Wall Street Journal.
"The shipping market has always been able to adapt to political change," said Lars Barstad, chief executive officer of tanker owner Frontline.
A European Union oil embargo and a US-led price cap have upended how Russia gets its oil to market. The price cap forbids Western shippers and insurers from dealing with Russian crude that trades above a USD 60 a barrel, according to the Wall Street Journal. Many tanker owners have opted to stay away from the Russian market completely. Russian oil now sells mostly to buyers in Asia, requiring much longer sailings compared with Europe.
The Journal said the resiliency of Russian oil exports indicates that the price cap is working as intended, preventing a surge in oil prices from the European embargo while complicating Moscow's ability to make top dollar on its exports.
"There is no real indication that there is a shortage of vessels to transport the oil," said David Wech, chief economist at Vortexa, though he said problems could emerge down the line.
Global benchmark Brent is trading at around USD 87 a barrel, not far above where it was when the sanctions took effect on December 5.
"Russia's oil industry, the lifeblood of its economy, still faces stiff challenges," the Journal said, adding, "Chief among them is the large discount it offers on its crude to lure buyers. Another round of sanctions will hit vital exports of refined fuels such as diesel next month." (ANI)