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From this Monday, December 5, Russia is subject to a European embargo on its crude oil exports by sea. To preserve its oil windfall, it could circumvent this ban by following the example of Venezuela and Iran. These two countries under oil embargo continue to export by detours.
The Islamic Republic has become a master in this clandestine trade. Just a week ago, a large shipment of Iranian crude (700,000 barrels) was unloaded in the Syrian port of Banias. The boat transporting it had been spotted and blocked in Greece by the American authorities. He ended up leaving for his final destination on a decision of the Greek justice. The adventures of this tanker are only the visible part of these hidden sales.
In theory, Iranian oil has hardly been exported since 2018 and 2019, the years of the embargo decreed by the United States. In practice, black gold continues to leave the country, up to a million barrels per day in recent months. In the medium term, US sanctions have at least halved Iranian crude exports. They are therefore effective, but not completely waterproof.
Tehran has set up a fleet of ghost tankers to ensure deliveries
They are often old boats, sometimes circulating without insurance. Out of sight, off the coast of Malaysia for example, crews mix oil origins, or transfer cargoes to other vessels and falsify the documents on the goods. Complicated, costly practices that slow down exchanges, but which achieve their objective. The other challenge of this occult trade for Iran, prohibited from any transaction in dollars, is to obtain a payment on a market functioning with the American currency. This is where Iranian clearinghouses come in. Their role is to convert these petrodollars via a maze of front companies. They have subsidiaries in benevolent countries, such as China – the main recipient of this crude sold under the counter –, Turkey or the United Arab Emirates. Western banks refuse to finance such contracts for fear of American reprisals, but they can be used by Iranian clearing houses, without their knowledge, or by shell companies not listed by American services.
Russia retains the right to export its oil. How will it be tempted to imitate Iran or Venezuela?
Russia used to delegate the transport of its crude to European freight and insurance companies, which it is now prohibited from if it exceeds the cap of 60 dollars a barrel. It therefore has an interest in using this phantom fleet to continue to serve European markets through circuitous routes and possibly to sell its oil above 60 dollars, which also depends on market conditions and the goodwill of buyers.
Iran and Venezuela have a ghost fleet of 200 tankers, about a third of which are already in the service of Russia
Since this summer, the second-hand tanker market has ignited. Old ships have seen their prices double under the pressure of new demand, no doubt from buyers linked to Russia. And since October, part of the tankers based until then in Cyprus and Malta have gone to register elsewhere, where they can continue to ship Russian oil without hindrance, as they used to do. We will see in the coming weeks whether the capacities of this phantom freight are sufficient to cover Moscow’s needs. Experts doubt it. Russia anticipates this shortfall: yesterday, it said it was ready to reduce its production.