Moscow Adapts to Restrictions by Using Huge Fleet of Tankers and Selling Its Oil to Asian Customers
Moscow has certainly faced its fair share of challenges in recent years, with economic sanctions, trade wars, and now, a global pandemic causing disruptions to its economy. However, the city has proven time and time again its resilience and ability to adapt to changing circumstances. This time, it has done so by utilizing its massive shadow fleet of tankers and shifting its focus to the booming Asian market for its oil exports.
Facing pressure from Western sanctions and the resulting decrease in demand for its oil, Russia has been forced to find alternative ways to sell its oil and keep its economy afloat. This is where the shadow fleet of tankers comes in. These tankers, owned and operated by Russian state-owned or affiliated companies, are not officially registered and do not appear on any shipping databases. As a result, they fall under the radar and have been dubbed the «shadow fleet.»
According to data from the U.S. Energy Information Administration, these tankers account for nearly a quarter of all Russian oil exports, significantly reducing the impact of Western sanctions on the country’s economy. This is no small feat, considering that Russia is the world’s second-largest oil exporter, with oil and gas accounting for nearly half of its export income.
But the shadow fleet is not the only tool in Moscow’s arsenal. To further mitigate the effects of sanctions and the global economic slowdown, Russia has also turned its attention to the booming Asian market. China, in particular, has become a key customer for Russian oil, with imports increasing by 16% in 2020 alone. The country’s demand for oil is expected to continue to rise, and with it, so will Russia’s position as a major oil supplier.
In addition to China, other Asian countries such as India and Vietnam have also increased their imports of Russian oil, providing a diverse customer base for the country’s exports. Russia has also been able to secure long-term deals with these countries, ensuring a stable market for its oil exports.
But why is the Asian market so important for Russia? One reason is the increasing sophistication of the region’s refineries, which are now capable of processing heavier and more sulfur-rich grades of oil. This is well-suited for Russian oil, which is known for its high sulfur content. Furthermore, the region’s growing energy demand and lack of significant domestic oil reserves make it an attractive market for oil exporters like Russia.
But it’s not just about finding new customers and markets. Moscow has also been actively investing in its infrastructure to support its growing oil exports to Asia. In September 2020, Russia completed the construction of a 2,000-kilometer-long oil pipeline connecting its Eastern Siberian fields to the Pacific coast, allowing for easier and more cost-effective oil shipments to Asian markets. This new pipeline has increased Russia’s oil export capacity to the region by over 50%.
While the shadow fleet and the focus on Asian markets have helped Moscow navigate through the current economic challenges, it has also stirred some controversy. Some critics argue that the use of the shadow fleet allows Russia to evade sanctions and continue its economic activities, undermining the intended impact of the measures. Others have expressed concerns over the safety and environmental risks associated with these unregistered tankers.
However, despite these concerns, the reality is that the shadow fleet and the Asian market have been a lifeline for Moscow, enabling the country to continue its oil exports and support its economy. Russia’s adaptive approach and its ability to find alternatives in the face of adversity should be commended.
As the world continues to navigate through the ongoing pandemic and its economic aftermath, Moscow’s story serves as a reminder that resilience and adaptability are key in overcoming challenges. With its shadow fleet and focus on the booming Asian market, Russia has not only found a way to survive but has also carved out a strong position in the global oil market. As one of the world’s leading oil exporters, Moscow’s success will not only benefit the country but also have a positive impact on the global economy.
