Russia’s exports, which last year counted for more than 10% of globally traded volumes, took a hit after Europe’s salvo in December. Two months on, though, they have recovered to levels last seen in June. The volume of oil on water, which climbs when the market jams up, is back to normal. As expected, China and India are picking up most of the embargoed barrels. Yet there is a surprise: the volume of cargo with unknown destinations has jumped. Russian oil, once easy to track, is now being moved through more shadowy channels.
Some trade still uses the same Greek shippers, British insurers, and Dutch and Japanese banks that have long ruled the industry. This channel survives thanks to the
price cap enforced by the West in December. That month, as European firms paused to consider the paperwork involved, the share of western Russian crude handled by them collapsed, from 60% to 13%. The legal trudge now done, the share has recovered to 36%. But it seems likely to drop off again. On January 1st the world’s biggest reinsurers, which insure insurers, decided to no longer cover shipping from Russian ports. Western insurers must now either exit the business or pass on the extra costs resulting from the increased risk.
At the other end of the spectrum lies the “black” trade, tried and tested by producers such as Iran and Venezuela. Battered tankers as much as half a century old sail to clandestine customers with their transponders off. They are renamed and repainted, sometimes several times a journey. They often transit via busy terminals where their crude is blended with others, making it harder to detect. Recently, several huge tankers formerly anchored in the Gulf were spotted taking cargo from smaller Russian ships off Gibraltar. Oman and the United Arab Emirates (uae), which imported more Russian oil in the first ten months of 2022 than in the previous three years combined, seem to have blended and re-sold some to Europe. Malaysia is exporting twice as much crude to China as it can produce. Much of it is probably Iranian, but ship-watchers suspect a few Russian barrels have snuck in, too.