A predicted tanker boom following a European ban on Russian refined oil imports from Sunday could turn out to be a damp squib, according to Braemar.

Shipowners have predicted a potential double-digit increase in tonne-miles for product tankers, but the shipbroker warned that Moscow’s response to the ban could lead to a cut in demand.

Owner confidence stems from a changed environment after 5 February, when Russian oil has to travel for longer to new markets and Europe is forced to search further afield for replacement barrels.

But Braemar head of research Henry Curra said Russia could respond to the ban, and new oil price caps introduced on the same day, by cutting production. The knock-on effect could hit product tanker rates.

“Tempting as it is to view the EU products ban and EU/G7 price cap as a strong positive for product tanker freight markets, it could prove to be another damp squib,” he said.

Russia’s diesel exports surged to a high in December of 1.2m barrels per day, with 60% of that going to Europe, according to the International Energy Agency. That will end on 5 February.

Braemar said 90% of total Russian product exports head to European ports.

European shipowners will be able to haul Russian product cargoes only if they are sold below oil price caps. Two are being discussed by European Union and G7 officials at around $100 for products such as diesel and one at $45 for products that typically trade below crude prices.

Braemar said freight rates would rise if cargoes suddenly shifted to a Russian-backed fleet to non-European destinations.

But Curra said it is equally likely that Moscow could cut refinery activity because higher transport costs would make the shipping of oil products unprofitable. That would lead to rates falling, he said.

Braemar’s findings contrast with BRS Group, which predicted a strengthening for product tankers, with most mainstream owners already shunning Russian ports and set to benefit from longer-haul journeys.

“We anticipate that larger clean tankers should experience more of a boost than their smaller brethren since they should also receive support from shifting European import patterns as the region looks farther afield, notable towards the east of Suez, for diesel,” BRS said.

Product tanker rates have slipped in 2023 after a stellar performance last year. Time charter equivalent rates for MR tankers in the Atlantic have fallen from $75,000 at the start of December to around $10,000, according to the Baltic Exchange.