Kadri Elias Hindoalla, representative of the Estonian Ministry of Foreign Affairs, tells “err.ee” that Russian ships can be serviced if oil is sold to third countries: “These services can be provided in cases where Russia sells oil to third countries, and all this is carried out within the limits of the price ceiling. The price of oil is still below 60 dollars per barrel,” explains Elias-Hindoalla.
The price ceiling for crude oil has been set by the G7 and the European Union in the hope that it will maintain the stability of the world oil market, thereby reducing Russia’s revenue. A European company that provides insurance for a Russian ship should make sure that the oil is not transported at a higher price.
“It is very difficult to verify in practice. True, they try to hide this price in other components. Maybe the price of oil is indicated within the price ceiling, but the real price is hidden in the transport service or other services,” says the representative of the Estonian Ministry of Foreign Affairs.
Prior to Russia’s full-scale invasion of Ukraine, Russian oil vessels were mostly owned by European Union, G7 or Norwegian companies or insured by EU, G7 or Norwegian companies. The involvement of European countries was up to 80% of cases when providing services to Russian oil vessels. At the moment, the involvement has decreased to 34%. That is why the transport of Russian crude oil has also been taken over by the “shadow fleet”, ships insured or owned by companies in countries that do not recognize oil price ceilings.
“If European service providers do not provide these services, but provide them somewhere in the third countries of the world, then the hands of the European Union do not really reach there at the moment,” says Elias-Hindoalla.
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Also, Russian crude oil tends to be transported by ships, about which it is not clear – who is the owner, who is the insurer. An example is the Andromeda Star tanker. The ship collided with another ship near Denmark in March. The oil tanker was carrying 730,000 barrels of Russian crude oil from the port of Primorsk. Oil was filled when its average price was above 60 dollars per barrel, that is, above the oil price ceiling.
The news agency “Bloomberg” reported that the ship submitted insurance documents to Denmark, which showed that the tanker was insured by the Norwegian company “Gard”. However, a company spokesperson denied this. “Bloomberg” did not manage to find out who the tanker belongs to.
The data of the Finnish think tank show that Russia still earns about 250 million euros every day by transporting crude oil. Volumes and profits are almost the same as at the beginning of 2022. “Bloomberg” agency has analyzed that in March 2023, the price of Russian crude oil was 48 dollars per barrel, but already this year, the price of a barrel exceeded 68 dollars.
The European Union will try to target the “shadow fleet” with the next package of sanctions in the coming weeks. However, at the same time, there is no clear answer on how to limit the “shadow fleet”, says the representative of the Ministry of Foreign Affairs of Estonia. He points out that the “shadow fleet” is a global problem. International organizations should be involved in solving the issue. Discussions should also take place outside the European Union, for example in the International Maritime Organization.
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