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Greece leads resistance to ban on European tankers transporting Russian oil

Greece leads resistance to ban on European tankers transporting Russian oil
Sam Chambers May 10, 2022

Strong lobbying from shipowning interests has seen the European Union pull back from some of its proposed sanctions on Russia, while Japan, another key client of commodities from the world’s largest country, has detailed plans to cut its Russian energy reliance.

The European Union is dropping a proposed ban on EU-owned vessels transporting Russian oil to third countries, while maintaining an important prohibition on P&I cover for Russian vessels.

Mediterranean shipping hubs Greece, Cyprus and Malta led the opposition to the planned vessel ban.

The EU is also trying to persuade all 27 members to enforce a ban on buying Russian oil, something that is facing significant opposition from Hungary.

“The Russian oil embargo currently being mulled over by the EU would tighten global crude markets and unprecedentedly shift trade flows,” a report published by analysts at Rystad Energy this week suggested.

The EU oil embargo will trigger a seismic shift in the European and global crude markets, which Rystad Energy expects could see as much as 3m barrels per day of EU crude imports from Russia cut by December 2022 in a full-fledged implementation of the policy.

The reduction in demand for Russian barrels from the EU will not be fully compensated by alternative markets such as China and India, Rystad suggested. Russia will try to redirect as much volume as possible from the West to the East, but this effort will be limited by infrastructure constraints.

The G7 group of rich nations agreed on Sunday to a similar phase-out of Russian oil.

“We commit to phase out our dependency on Russian energy, including by phasing out or banning the import of Russian oil. We will ensure that we do so in a timely and orderly fashion, and in ways that provide time for the world to secure alternative supplies,” the joint statement from the G7 said.

Japan, a G7 member and big buyer of Russian energy, has said it will ban “in principle” Russian oil imports, its prime minister Fumio Kishida said yesterday. Russia supplied 4% of Japan’s total crude imports last year with 92% coming from the Middle East.

However, Kishida said yesterday that Japan remains committed to keep the country’s interests in the giant Sakhalin 1 and 2 LNG projects in Russia’s Far East.

Tokyo’s latest move comes a month after the government announced a phased-in ban of Russian coal imports, also in line with G7 commitments.

In related news, as the war between Russia and Ukraine nears its 12th week, Ukraine’s president, Volodymyr Zelenskiy, said on Monday that trade at the country’s ports was at a standstill and urged the international community to take immediate steps to end a Russian blockade to allow wheat shipments and prevent a global food crisis.

European Council president Charles Michel, who was visiting Odesa yesterday, wrote on Twitter that he had seen silos full of grain, wheat and corn in Odesa that was ready for export but blocked.

“This badly needed food is stranded because of the Russian war and blockade of Black Sea ports. Causing dramatic consequences for vulnerable countries. We need a global response,” he wrote.

Ukraine’s prime minister, Denys Shmyhal, said yesterday his country is losing $170m every day it is cut off from access to the sea.

“90m tonnes of agricultural produce, which Ukraine planned to export to countries in Asia, Africa, and Europe, have been blocked,” Shmyhal said.