Western Oil Tanker Firms Flock Back to Russia After Price Plunge

By Bloomberg News

May 30, 2025 (Bloomberg) –From Athens to New York, oil tanker companies from Group of Seven nations are flocking back to the Russian oil trade.

Tumbling global oil prices this year brought western-owned ships back into legal compliance with a G-7 cap that was designed to curb the Kremlin’s access to petrodollars. At the same time, sweeping farewell sanctions from the outgoing Biden administration temporarily disrupted a so-called shadow fleet of vessels that Russia had been using.

In the past three months, almost a third of all the nation’s flagship Urals cargoes left Russia’s ports on western tankers, ownership and vessel tracking data compiled by Bloomberg show. It’s the highest proportion since the late 2023, when the US Treasury first imposed sanctions on vessels violating the cap.

“We have observed a notable increase in Russian crude shipments on western-owned Aframax and Suezmax vessels from Russia’s Baltic and Black Sea ports since February-March,” said Svetlana Lobaciova, principal analyst at E.A. Gibson Shipbrokers in London, a firm whose history dates back to 1870. “Key factors driving the shift include buyer preferences and the decline in Russian oil prices below the price cap level.” 

Under the restrictions the Group of Seven industrialized nations imposed following the Kremlin’s invasion in Ukraine, western operators are only allowed to transport Russian crude if its price is $60 a barrel or less. 

From April, Urals, hovered at just over $50 — a consequence of sanctions and tumbling world crude prices. The plunge has made it possible for the western firms to return to Russia without violating US or European Union laws.

In rough terms, western insurers have also gone back into the trade in similar proportions, covering against risks including spills and collisions. That’s not surprising given that they tend to cover western-owned ships.

The shift also followed the most aggressive restrictions on Russia’s oil industry, which were imposed by Joe Biden’s outgoing administration in January, including sanctions on about 155 tankers. Many of the ships became idled in the weeks that followed their blacklisting, creating a need for alternative vessels.

Due to the January restrictions, some vessels that used to haul crude from Russia’s western ports were redeployed to the nation’s Far East to service shipments of premium ESPO crude, said Mary Melton, senior freight analyst at Vortexa. 

“This left a vessel supply gap in the Baltic that needed to be filled,” she said. 

Western shipowners seized the opportunity. The sanctions premium in freight rates from Russia’s western ports reached as much as $10-12 a barrel over the past three months, Argus data show. While they’ve eased recently, they remain near multi-week highs.

Lower Cap

The shipowners’ renewed interest in Russian oil comes as some G-7 nations are looking into ways to lower the price cap, further reducing oil-export revenues the Kremlin uses to fund the war in Ukraine. 

To be sure, so far the US has been unwilling to impose tougher restrictions on Russia, with Donald Trump’s administration arguing such an approach could push the Kremlin away from peace negotiations over Ukraine. 

Read: EU Sees $50 a Barrel Cap on Russian Oil as Reasonable Option

Lower Urals prices are putting a pressure on Russia’s national budget, which is dependent on the oil and gas industry for about a third of its revenues. 

READ: Russian Oil Revenue Shrinks Following Drop in Global Crude Price

It’s difficult to predict how sustainable the share of western tankers in Urals exports will be amid geopolitical uncertainty. “Much will depend on the progress of Russia-Ukraine peace talks, the dark fleet’s ability to circumvent sanctions, and the risk appetite of buyers of Russian barrels,” Lobaciova said. 

As soon as oil prices return to growth, the share of western vessels will probably decline as those owners “will be forced to refuse to ship Russian crude,” said Roman Sokolov, director of Moscow-based Price Benchmark Center. At the same time, lower competition could spur freight rates for vessels carrying Russian crude and attract new tankers to the trade, he added. 

© 2025 Bloomberg L.P.

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