The latest report from shipping broker Gibson points out that, although the EU's comprehensive embargo on maritime services is still on the discussion table, its impact has been evident in the ship trading market. The value of 15-year-old Suezmax ships has skyrocketed 17.5% in just the past 6 months.
The main reason is that Russian-affiliated operators are taking advantage of the delayed implementation time to purchase more old tonnage ships. They are willing to pay high prices to own the dilapidated Aframax and Suezmax ships in order to be self-sufficient in transportation before Western companies are completely banned from transporting Russian crude oil.
If the ban is passed, Gibson estimates that about 10 Aframax and 14 Suezmax ships each month - which are carrying Russian oil from Western ports - will be pushed back to the international market. This shift will create a major disruption as Russia is forced to find ways to manage with its limited fleet to maintain oil flows to Asia.
To solve the ship shortage problem, observers believe that Russia may switch to using super oil tankers (VLCC) through transshipment from ship to ship (STS) in the North Atlantic or Mediterranean. This is a tactic rarely used by Moscow before but could become a lifeline in the context of medium-sized ships becoming scarce.
However, the report also pointed out a fatal "loophole" in the draft new sanctions: The ban only applies to crude oil, completely ignoring refined oil products. Currently, more than 50% of Russia's fuel exports (such as diesel, naphtha) are still being transported by official Western fleets.
Experts warn that if the European Union extends the ban to oil refining products, the global energy system will collapse. With world oil refining capacity only increasing by about 800,000 barrels/day this year - just enough to meet growth demand, eliminating the supply of products from Russia is impossible without causing a serious shortage crisis.
