Sanctions have split the world’s tanker fleet in two. On one side, those that follow Western rules; on the other, those that don’t.
The European Union and G-7 nations, together with Australia and Japan, implemented sanctions against Russian refined products exports Feb. 5. Restrictions on Russian crude exports began Dec. 5. The system was designed to keep Russian cargo flowing — and it’s definitely still flowing.
“We see no indication that Russia will have to cut back its exports of crude or refined products,” said David Wech, chief economist of Vortexa, during a presentation Thursday.
And despite predictions to the contrary, he believes there will be enough vessels to handle rerouted refined product flows, as has already proven to be the case in crude shipping.
The reason: Russian sanctions spurred a massive increase in the so-called “dark fleet” or “shadow fleet,” older tankers with opaque ownership that operate outside Western insurance, financial and shipping-service circles, and that have a habit of turning off their location beacons.
A representative of Trafigura, one of the world’s largest trading companies, told Bloomberg that the shadow fleet now numbers around 600 vessels, comprising 10% of the world’s crude tankers and 7% of its product tankers.
“Frankly, it is becoming a big deal,” said Svein Moxnes Harfjeld, CEO of crude tanker owner DHT (NYSE: DHT), during a quarterly call on Thursday.
“Maybe the politicians that set up the current sanctions were aware this would happen and it was an acceptable collateral damage … but there is a lot of murky stuff going on.”
Read More at Freight Waves
Read the rest at Freight Waves