Europe comes up with a cunning and harsh move against Russian oil
French President proposed to detain large quantities of oil tankers carrying Russian oil at sea, he clearly knows that it is almost impossible to seize these tankers. But the purpose of this move is to keep the ships of the "shadow fleet" detained for several days or even weeks — which is enough to damage Russia's oil exports. What are the dangers of this approach?
French President Emmanuel Macron called on other countries to follow France's example and start detaining ships transporting Russian oil. He said that even if these ships were only detained for a few days or weeks, it would disrupt the supply of Russian oil.
Macron believes that the "shadow fleet" is an ideal target for increasing pressure on Russia, and he proposed cooperation with NATO under the framework of the "coalition of the willing."
On October 1, the French military intercepted a tanker flying the flag of Benin in international waters and arrested two people — the captain and his assistant (both Chinese citizens). Macron admitted that French law enforcement officers detained the tanker near the French coast as part of the "secondary sanctions" against Russia, to combat the so-called "shadow fleet" of Russia.
Russian President Vladimir Putin called the act of detaining a tanker in neutral waters by France as "piracy." "Yes, that's piracy. I know about this. The tanker was unreasonably stopped in neutral waters, they obviously wanted to find something on board, such as military equipment or drones, but there was nothing like that on the ship, neither in the past nor in the future," Putin said at the Valdai International Debate Club meeting. He pointed out that the tanker flew the flag of a third country and the crew came from different countries. "To be honest, I don't know how much this has to do with Russia, but I know that this happened," the president added.
Maria Zakharova, a spokesperson for the Russian Foreign Ministry, reminded that "it is well known that any restrictions imposed without the UN Security Council are a serious violation of international law." However, the French side cited Article 110 of the United Nations Convention on the Law of the Sea to defend itself. This article specifies the circumstances under which foreign merchant ships can be boarded and inspected on the high seas, such as when there is suspicion of piracy, slave trading, or drug trafficking. Even if no illegal items are found on board, the ship will be detained for at least one day.
If European countries start to investigate and detain tankers on a large scale, it could indeed hit Russia's oil supply. It is now easy to understand why the EU includes various vessels of the so-called "shadow fleet" in each new set of sanctions — the large number of tankers on the blacklist provides an excuse to temporarily detain them. In the end, they have another reason to accuse: violating the price cap. With the drop in international oil prices, the EU has also reduced the price cap on Russian oil accordingly.
"Initially, there were rumors that the EU might intercept oil tankers carrying Russian oil in the Baltic Sea, but now their actions have expanded to the Atlantic. A European country's president openly calls for piracy — that is, taking illegal actions to detain tankers — which is shocking," said Igor Yushkov, an expert from the Financial University under the Government of the Russian Federation and the National Energy Security Fund (ФНЭБ). "Macron himself knows this, so he proposed to detain the tankers for just a few days or weeks and then release them on the grounds of 'lack of justification for detention.'"
Why does Europe do this? Regardless of Western wishes, they cannot completely cut off Russia's oil exports — not only because of legal restrictions, but also because this would bring serious economic consequences for the West itself.
"If the logistics chain is completely destroyed and Russia's ability to export oil is deprived, the decline in Russia's oil exports would lead to a shortage of 'black gold' (referring to oil) in the global market, thus pushing up oil prices. This is a real risk for all Western oil-importing countries, including France," Yushkov pointed out. Russia is an important player in the global energy market, and its exit would not go unnoticed: in 2024, Russia's oil exports reached 240 million tons.
Therefore, all the restriction measures introduced by the West only increase the difficulty of Russia's oil exports, but do not completely block the exports.
In fact, Macron's proposal is a new method — by detaining tankers for weeks, to increase the cost of Russia exporting "black gold." If this practice becomes the norm, it could indeed harm the financial situation of Russian exporters.
"Oil suppliers pay the ship owners daily for the rental of the tankers. In addition, the ship owners will see the detention as an additional risk, and thus increase the rent," explained an expert from the National Energy Security Fund. "They try to increase the cost of transporting oil for Russian companies in this way. The logic is consistent with setting a price cap, both aiming to reduce Russia's oil revenue. But even after lowering the price cap, this mechanism has not worked yet."
Yushkov said: "This may increase the cost of Russia exporting oil by sea, but it may not necessarily reduce the volume of exports — everyone will eventually adapt to this situation. The export destinations may change, for example, Russia may reduce oil exports from the Baltic Sea and increase exports from Novorossiysk (a southern port)."
In his view, the added costs will likely be passed on to the oil companies, causing their economic efficiency to suffer.
Additionally, the rise in the "risk premium" (discount due to increased transportation risks) of Russian oil may further widen the gap between its price and the international oil price. Experts said that currently, Urals crude oil is discounted by $10-12 per barrel compared to the international benchmark price. At the same time, due to the overall decline in international oil prices, the price of Urals crude oil is also falling. If the discount increases to $20-30 per barrel, it will not only affect the profits of oil companies but also impact the Russian federal budget.
"Since the beginning of this year, Brent crude oil prices have fallen by nearly 13%. As a result, the price of Urals crude oil has also dropped by about $10 per barrel, a decrease of nearly 15%. According to data from the Russian Ministry of Economic Development, the average price of Urals crude oil at the beginning of the year was $68 per barrel, and by August, it had dropped to $58 per barrel," said Nikolai Duzhenco, an analyst at the "Finam" Group (ФГ «Финам»).
During the first eight months of this year, Russia's oil and gas revenue fell to 6 trillion rubles. It is expected that the total oil and gas revenue for the year will reach 8.6 trillion rubles, lower than 11.1 trillion rubles in 2024. Duzhenco added that the depreciation of the ruble may help improve the situation of oil and gas revenue.
(Note: 1. "Shadow fleet" (теневой флот) refers to an informal fleet of tankers organized by Russia to bypass Western sanctions and maintain oil exports, mostly consisting of old tankers, some of which fly the flag of a third country; 2. "Secondary sanctions" (вторичные санкции) refer to sanctions imposed by the West on entities or individuals from third countries who conduct business with Russia, aiming to cut off Russia's indirect connections with the international market; 3. Urals crude oil (Urals) is the main type of crude oil exported by Russia, its price is usually lower than the international benchmark price (such as Brent crude), the discount depends on factors such as geopolitics and transportation costs; 4. Brent crude oil (Brent) is one of the most important benchmark prices for crude oil globally, mainly reflecting the market prices of crude oil in Western Europe, Africa, and the Middle East.)
Original: https://www.toutiao.com/article/7556914789675549247/
Statement: This article represents the views of the author. Please express your opinion by clicking the [top/beat] button below.