Russia’s oil trade is rising as record volumes of Russian crude are carried on ‘dark fleet’ vessels
A Russian-chartered oil tanker in the sea off Morocco in an area identified by maritime technology company Windward as a hub for smuggling oil.
Europa Press | Getty Images
Recent data shows the discount on Russian oil narrowing and exports increasing despite the G-7 price cap on Russian petroleum exports and U.S. sanctions.
According to Clearview Energy Partners, Russian crude prices over the last four weeks have averaged about six cents below the Brent crude price. That is far off the trading discount when the cap was first put in place. When the cap was fully phased in, in February 2023, Russian crude was selling at a 30% discount. A year ago, the discount was about 16%.
Ukraine allies, including the U.S., have banned the import of Russian crude, while a price cap imposed on Russian oil by the G7 countries, the European Union and Australia bans the use of Western maritime services such as insurance, flagging and transportation when tankers carry Russian oil priced at or above $60 a barrel to nations where a ban is not enforced.
In a recent report to clients, Clearview Energy Partners characterized the G-7 price cap on Russian petroleum exports to third countries as “increasingly loose.”
Kevin Book, managing director of research at Clearview Energy Partners, told CNBC that despite the G-7’s June and September calls for improving the price cap, and recent guidance urging parties to Russian petroleum transactions to better scrutinize cargoes, “a U.S. pinch on Russian petroleum seems unlikely until after the election.”
“A cap enforcement crackdown runs the risk of driving up crude prices,” he said. “Plus, using ‘secondary’ sanctions to enforce the cap could push reputable insurers out of the Russian crude game entirely, leaving the market to potentially insolvent stand-ins.”
Book explained that part of the narrowing of the discount is a result of Russian oil finding additional buyers, including India and China.
Record volumes of sanctioned Russian oil were carried by the “dark fleet” and known sanctioned tankers without known insurance over September, according to a recent report from Lloyd’s List.
The Lloyd’s List Intelligence unit analysis of data from energy cargo tracking firm Vortexa revealed that 69% of all crude shipped in September was carried on dark fleet tankers and 18% was carried on tankers owned by Russian government-controlled Sovcomflot. It is the most volume moved since tracking of the monthly dark fleet data began in mid-2022 (measured by deadweight capacity of vessels.) In May, 54% was recorded, the previous high.
Chinese and Indian oil traders, refiners, and port authorities were the drivers of this growth.
Lloyd’s List determines if a tanker is part of the dark fleet based on factors including if the ship is 15 years or older, is anonymously owned or has a corporate structure designed to conceal ownership, is handling sanctioned oil trade, and is using deceptive shipping practices. Its analysis showed a flurry of flag-hopping, where a vessel changes its country registration, as well as ownership and management changes amongst the vessels in the dark fleet to avoid detection.
The dark fleet data does not include Russia’s Sovcomflot or Iran’s National Iranian Tanker Co.
Its data revealed that 5% of all Russian oil in September was transported by 11 tankers, with nine of those vessels sanctioned by the UK or EU between July and September and owned by the Russian government-controlled tanker company Sovcomflot. The remaining vessels were sanctioned by the U.S. Office of Foreign Assets Control for breaching sanctions on Syrian and Iranian oil. Those vessels are the Eternal Peace and Nebulax.
Some of the Sovcomflot tankers that Lloyd’s List identified in its report were sanctioned by the UK or EU between July and September. Some tankers changed vessel names, reflagged the vessel’s origin to Barbados, or redomiciled registered ownership to Seychelles and changed their ship management to a newly incorporated UAE-based ship manager, Avebury Shipmanagement.
Greece-owned tankers have shipped 23% of oil from Russia in September, consistently over the last three months, according to Lloyd’s List. The majority of the UK- and EU-sanctioned tankers have already discharged their oil in China.
Andy Lipow, president of Lipow Oil Associates, said despite the price cap, some ship owners have decided that it was extremely profitable to have their vessels become part of the dark fleet and risk United States and EU sanctions.
“After all, Russian oil continues to be purchased by Chinese and Indian refiners with little repercussions from the U.S. or EU,” said Lipow.
A Treasury spokesperson told CNBC, “Two years since the price cap was implemented, it is unsurprising that Putin is still sinking money into building and maintaining a shadow fleet to escape the Coalition’s sanctions: that evasion costs the Kremlin, and diverts money that would otherwise be going to the battlefield. The Price Cap Coalition continues to engage with industry to ensure compliance with the price cap and to increase Putin’s costs of going outside it.”
The number of uninsured vessels carrying sanctioned oil also increased, according to Lloyd’s List, with some 201 of the 310 tankers tracked not having insurance with the 12 clubs that form the International Group of P&I Clubs. That represented 68% of the vessels when measured by deadweight, and the lowest number of tankers tracked with IG club insurance, surpassing 67% uninsured recorded in July and August.
Lipow said the oil market is pricing in a greater probability of a war between Iran and Israel that could impact supply.
“The biggest risk to the oil market is the closure of the Straits of Hormuz, and while unlikely, if it were to happen, oil prices would rise $30 per barrel,” he said. Despite the hostilities, oil prices remain under pressure, he said, as increased production from the U.S., Canada and Guyana adds to the supply picture while OPEC+ delays the restoration of its production cuts.
The increased use of dark fleet vessels comes with greater maritime safety and environmental risks.
Lloyd’s List warned in a recent note that shipping safety has become a “casualty of economic sanctions” with attempts to enhance sanctions policy leading to greater ranks of tankers determined to evade it.
Insurance giant Allianz said in May that dark fleet tankers had been linked to more than 50 accidents.
Lipow told CNBC if these vessels were to be involved in an accident that resulted in an oil spill, the owners — assuming they could be identified and found — would simply walk away, leaving the mess and subsequently the cleanup for someone else to do.
Enbridge, a Canadian energy company, just announced it’s moving forward with an 815-megawatt (MW) solar project called Sequoia in Texas. When it’s done, it’ll be one of the largest solar farms in North America. The project’s price tag is a hefty $1.1 billion.
Enbridge’s Sequoia, around 150 miles west of Dallas, has already landed long-term power purchase agreements (PPAs) with AT&T and Toyota, ensuring most of its output is sold for years to come. This deal was highlighted in Enbridge’s third-quarter report on Friday.
Sequoia will be built in two phases, with power expected to start flowing in 2025 and 2026. Enbridge says it’s taken steps to reduce risks by securing equipment and procurement contracts in advance. Permits and purchase orders are also locked down.
Toyota’s PPA with Enbridge’s Texas solar project is part of Toyota’s broader push toward sustainability, as the automaker aims to achieve net zero by 2035 and match 45% of its purchased power with renewable electricity by 2026 as it still clings to its “diverse powertrain strategy.”
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Environment
NIO’s EV sales top 20,000 for the sixth straight month as new low-cost SUV shows promise
With its new electric SUV rolling out, NIO’s (NIO) sales topped the 20,000 mark again in Oct, its sixth straight month hitting the milestone.
NIO sold 20,976 vehicles last month, up 30.5% from October 2023. The NIO brand sold 16,657 vehicles, while its new “family-oriented smart vehicle brand,” Onvo, contributed 4,319 in its first full sales month.
After launching its new mid-size Onvo L60 electric SUV in September, NIO said production and deliveries are steadily ramping up.
At the end of October, NIO’s Onvo had 166 Centers and Spaces throughout 60 cities. Onvo plans to continue expanding its network to drive future growth.
NIO’s new electric SUV starts at around $21,200 (149,900) and is a direct rival to Tesla’s Model Y. The base $21K model is if you rent the battery. Even with the battery included, Onvo L60 prices still start at under $30,000 (206,900 yuan), with a CLTC range of up to 341 miles (555 km). That’s still less than the Model Y.
Tesla’s Model Y RWD starts at around $35,000 (249,900 yuan) with 344 mi (554 km) CLTC range in China.
NIO’s new Onvo brand drives higher Oct sales
NIO has often compared its new electric SUV to the Model Y, claiming it’s superior in many ways. The L60 has better consumption at 12.1 kWh/100km compared to the Model Y at 12.5 kWh/100km).
With a longer wheelbase (2,950 mm vs 2,890 mm), NIO’s electric SUV also provides slightly more interior space.
Despite the L60’s success so far, NIO believes its second Onvo model will be an even bigger hit. It could be a potential game-changer.
“If you think the L60 is good, then this new model is a much more competitive product,” NIO’s CEO William Li told CnEVPost after launching the L60. Onvo will launch a new EV every year. Following the L60, Onvo will launch a new mid-to-large-size electric SUV next year.
NIO’s leader claims the new model will be revolutionary. According to Li, it will offer even more surprises than the L60. Deliveries are planned to begin in Q3 2025.
| NIO Onvo L60 vs Tesla Model Y trims | Range (CLTC) |
Starting Price |
| NIO Onvo L60 (Battery rental) | 555 km (341 mi) 730 km (454 mi) |
149,900 yuan ($21,200) |
| NIO Onvo L60 (60 kWh) | 555 km (341 mi) | 206,900 yuan ($29,300) |
| NIO Onvo L60 (85 kWh) | 730 km (454 mi) | 235,900 yuan ($33,400) |
| NIO Onvo L60 (150 kWh) | +1,000 km (+621 mi) | TBD |
| Tesla Model Y RWD | 554 km (344 mi) | 249,900 yuan ($34,600) |
| Tesla Model Y AWD Long Range | 688 km (427 mi) | 290,900 yuan ($40,300) |
| Tesla Model Y AWD Performance | 615 km (382 mi) | 354,900 yuan ($49,100) |
Local reports suggest a six-or seven-seat electric SUV could hit the market even sooner. With rumors of a launch around Q1 2025, deliveries could happen as soon as May 2025.
According to sources close to the matter, the L60 is just a “stepping stone” with even more exciting EVs on the way. The source claimed the new six-seat option will start at around $42,100 (300,000 yuan).
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