Friday, July 8, 2022

Shippers Still Willing to Touch Russian Crude Oil Are Cashing In 

  • Earnings surged for hauling ESPO grade from Kozmino to China
  • Chinese, Greek, Turkish ship owners dominate lucrative trade

 A handful of shipowners still willing to transport Russian crude are reaping big rewards on at least one route as others shun the trade.

Shippers can earn around $1.6 million hauling Russian ESPO oil on a small tanker from the eastern port of Kozmino to China, said shipbrokers. That’s around triple the amount prior to the invasion of Ukraine, based on data compiled by Bloomberg. The lucrative trade has become a regular fixture for vessel owners from China, Turkey and Greece, they added.

Russia’s invasion of Ukraine has led to fewer shipowners handling the OPEC+ producer’s crude oil on concerns about reputational damage or running afoul of financial sanctions. Almost all recent exports of ESPO have been transported to, or are bound for Chinese ports, with the occasional shipment going to India.

Ships sending Russian crude to China
Shipowners handling the movement of Russian ESPO crude to China are cashing in on high rates.

China’s Cosco Shipping Holdings Co. is among the most active in the ESPO trade alongside Russia’s Sovcomflot, data compiled by Bloomberg and shipbrokers show. Active Shipping & Management Ltd., BEKS Ship Management & Trading SA and Dynacom Tankers Management Ltd. from Turkey are still hauling the grade, along with Greek companies Avin International Ltd. and Estoril Navigation Ltd. 

The shipping companies didn’t respond to emails seeking comment.

It usually takes about five days to haul ESPO to China on an aframax tanker, making it one of the more profitable routes globally, said shipbrokers. The short transit time means ships have little downtime when sailing back empty to Kozmino, thus increasing their utilization rates and profits, they added. An aframax can carry about 730,000 barrels of crude. 

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Those shippers still in the ESPO trade are capitalizing on high profits before new European Union sanctions kick in, after which there will be more scrutiny on dealings with Moscow.

The Group of Seven nations last week discussed different ways to maintain global oil supplies while limiting Moscow’s revenue. A proposal, which included price caps and restrictions surrounding access to insurance cover and shipping services, was floated although no decisions have been finalized.

— With assistance by Sharon Cho, and Sarah Chen

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