Control of oil tankers
Is the EU targeting Russia’s “ghost fleet”?
November 15, 2023, 8:35 p.m
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Russia has found a way to sell oil on global markets despite sanctions. According to a media report, this is exactly where the EU wants to start tightening sanctions. There could be intensive ship controls in the Danish straits.
In the run-up to EU consultations on tightening sanctions against Russia, a media report about alleged oil tanker controls in the Baltic Sea caused a stir. The Financial Times reported that Denmark should be tasked with inspecting and, if necessary, stopping tankers carrying Russian oil. However, EU diplomats said a recent EU Commission proposal made no reference to tanker controls or Denmark.
The government in Moscow stated that it knew nothing of such a project. At the same time, she urged compliance with shipping rules. Statements from Denmark and the EU Commission were initially not available. The 27 EU countries want to discuss a twelfth sanctions package against Russia on Friday. According to diplomats, the EU Commission proposed various measures in advance, including stricter implementation of the oil price cap. Accordingly, shipping companies should be asked to break down the costs of Russian oil transports in detail. This is intended to prevent shipping companies from being able to conceal the true price of the oil being transported.
Russia, the world’s second largest oil exporter, was able to sell the raw material on global markets despite the sanctions. According to shipping experts, the price cap is being circumvented on a large scale through forged documents. Russian oil is shipped using tankers that are registered and insured in countries outside the West. Industry experts have already warned of a “ghost fleet” consisting of old ships that increases the risk of accidents at sea. Looking at the “FT” report, three EU diplomats said they had seen nothing in the Commission’s proposal about oil tanker controls or about Denmark.
According to the “FT”, which cites three unnamed informants, there are plans to identify ships from the West without insurance cover. The EU, the G7 and Australia want to use the leverage of insurance coverage to enforce their sanctions against Russia. Accordingly, ship insurers are only allowed to provide protection to tankers if the value of the oil transported does not exceed $60 per barrel. The price cap is intended to limit Russian income from oil trading and thus limit the financial options for the Ukraine war. Around a third of the Russian oil exported by ship passes through the Danish Baltic Sea straits on the way to the world’s oceans. An attempt to stop these exports could drive up oil prices and lead to conflict with Russia. Experts expressed doubts as to whether the approach would be compatible with international maritime law.
“Would come close to a declaration of war”
Three shipping experts said such a blockade would violate basic naval rules – including the UN Convention on the Law of the Sea. Opinion was divided among defense analysts. “Blocking merchant ships in the Danish Straits would amount to a declaration of war,” said independent expert Hans Peter Michaelsen. In addition, it would not be an easy task for the Danish navy, which does have small patrol boats. “But they will look like lifeboats next to an oil tanker.”
On the other hand, Peter Viggo Rasmussen from the Royal Danish Defense Academy assumes that his country would carry out such a task with conviction. Finally, Denmark stands for a tough stance towards Russia with a view to the Ukraine war. More than 1.5 million barrels per day are expected to be shipped through the Danish Straits from the Russian Baltic Sea ports of Primorsk and Ust-Luga in November. This corresponds to around 1.5 percent of the global oil supply.
Before the start of the Ukraine war in February 2022, all Russian oil shipments across the Baltic Sea were destined for Europe. Since then, the majority of these exports have gone to China, India, Egypt and Turkey. For merchant shipping, there are essentially two routes that lead between Denmark and Sweden from the Baltic Sea out to the world’s oceans – through the Öresund between the Danish island of Zealand and Sweden and through the Great Belt between the Danish islands of Funen and Zealand.