The fall in the price of Russian Urals crude towards the G7 price cap could be a “double positive” for Western tanker owners, according to one US shipbroker.
A tricky choice awaits mainstream shipping companies if cargoes are approved below the $60 per barrel level imposed by the bloc in 2022.
Poten & Partners noted a significant decline in oil prices this summer.
“If these price levels are maintained — or go even lower — there could be implications for the tanker market,” the New York shop said.
The crude oil price cap, which came into effect on 5 December 2022, initially had a limited impact, Poten explained, because Urals barrels mostly traded below the $60 level until the summer of 2023.
Most publicly traded shipping companies left the Russian trade, but many private owners continued to move Russian oil, taking advantage of the opportunity to receive premium earnings, the broker said.
But as Urals prices rose through the summer of 2023, the pressure on Western owners still engaged in Russian trades increased.
The US, the European Union and the UK were increasingly targeting companies and tankers they determined had breached the price-cap sanctions, Poten added.
This forced most of the remaining Western owners out of the trade.
Some industry experts estimate that at least 70% of Russian oil is currently exported on tankers from the “dark fleet” outside mainstream insurance coverage.
Surplus of tankers
This created a surplus of ships in non-Russian trades, putting pressure on freight rates.
“However, this may be about to change,” Poten said.
Some pundits have indicated that Urals is already trading below the price cap.
“Technically, this would open the trade up to Western owners again. If this happens, this would be a double positive,” Poten added.
“It would increase the utilisation of the mainstream tanker fleet, supporting the freight market,” the US shop said.
“At the same time, it would marginalise the older tankers of the dark fleet, often with opaque ownership, substandard maintenance, inexperienced crews and lacking proper insurance,” it concluded.
