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US Sanctions Cover 8% of Tankers Shipping Russian Oil

The logo of Russian state shipping company Sovcomflot is seen on the multifunctional icebreaking standby vessel "Yevgeny Primakov" moored in central St. Petersburg, Russia February 3, 2018. REUTERS/Anton Vaganov/File Photo

US Sanctions Cover 8% of Tankers Shipping Russian Oil

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April 16, 2024

MOSCOW, April 16 (Reuters) – U.S. sanctions are limiting tanker activity for Russia’s top shipping group, Sovcomflot, the company’s head said on Tuesday, as Washington tightens the screws on Moscow. 

The U.S. imposed sanctions on Sovcomflot on Feb. 23 as Washington seeks to reduce Russia’s revenues from oil sales that it can use to support its military actions in Ukraine.

Sanctions have impacted the company’s operations, “limiting our geography and commercial prospects”, Sovcomflot CEO Igor Tonkovidov told reporters.

He added that as sanctions are a relatively new instrument to the shipping market, the full impact of them is yet to be seen.

Washington has stepped up pressure on Moscow in recent months, introducing tougher restrictions on its energy sector, a key source of Russian revenues.

The U.S. Treasury’s enforcement arm OFAC has also designated 14 crude oil tankers as property in which Sovcomflot has an interest. 

Sovcomflot, which was previously one of the world’s leading tanker operators, transported 75 million metric tons of oil in 2023, mainly to the markets of China, India and the Mediterranean. 

Russian President Vladimir Putin has said the West is trying to throttle the Russian economy and rejects sanctions measures. 

There are hundreds of ageing oil tankers that form part of a parallel fleet of vessels transporting Russian oil and a $60-per-barrel price cap on Moscow’s oil exports.

About 20-25% of Russian oil is transported by tankers controlled by Russian companies, and the remaining volumes are handled by the so-called shadow fleet, Tonkovidov said on the sidelines of the National Oil and Gas Forum in Moscow.

“The neutral (shadow) fleet serves the lion’s share of (Russian) oil exports. These are not bright horses, but old ships. This is a challenge for insurance companies,” he said. 

“Eight percent of the fleet involved in the transportation of Russian oil have fallen under blocking sanctions,” he said, adding that this tightens tonnage for the transportation of Russian crude oil and products. 

(Reporting by Olesya Astakhova in Moscow, Jonathan Saul in London, Editing by David Goodman and Ros Russell)

(c) Copyright Thomson Reuters 2024.

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