The cost of transporting oil from Russia to China has surged nearly threefold compared to levels observed before Jan. 10 — the date the U.S. Treasury unveiled sweeping new measures targeting Russia’s “shadow fleet.” Freight rates are expected to climb even higher, according to market participants cited by Bloomberg.
Since the Western imposition of a $60 per barrel price cap on Russian crude in December 2022, Moscow has used its so-called “shadow fleet” of tankers to transport oil to international buyers in circumvention of sanctions. The vessels that make up this fleet are often poorly maintained and frequently lack proper insurance.
As of Monday, the cost of shipping oil from Russia's Far East to China climbed to between $5-5.5 million per voyage, a sharp increase from the $1.5 million recorded before Washington's sanctions were announced last Friday, according to Bloomberg, which cited anonymous traders in its report.
The new sanctions introduced by the U.S. on Jan. 10 targeted 183 oil tankers involved in transporting Russian oil. Following the announcement of the restrictions, over 60 tankers dropped anchor off the coasts of China, Singapore, and Russia.
Earlier on Jan. 16, British shipping journal Lloyd’s List reported that China’s Longkou port had received the first sanctioned vessel carrying Russian oil. According to the publication, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) has allowed ports to accept vessels that were loaded before Jan. 10. The deadline for sanctioned tankers to unload their cargo has been set for Feb. 27.
