Russia has continued to export almost as much seaborne crude since the near Europe-wide ban on Russian oil imports imposed by the EU, Switzerland and the UK imposed in December last year according to analysis by Energy Intelligence.

It says that Russian crude is bypassing restrictions on the provision of letters of credit (L/Cs) now in place and is being shipped to markets outside Europe, with exports being handled by "a new group of obscure traders using non-Western tankers".

No L/Cs, new markets

Citing trading sources, Energy Intelligence says that whereas most deals were previously on L/C terms with an international bank, most are probably now executed on open account terms.

"For a commercial bank to provide an L/C for a Russian crude cargo, they would need to see documentation that the price cap was applied," another trader told Energy Intelligence.

It suggests that oil is now reaching markets in China and India, some of which may be routed via Malaysia, which is thought to be trading in sanctioned crudes from Russia, Iran or Venezuela.

European action

The European Commission (EC) issued a notice providing advice for financial institutions issuing L/Cs opening credit lines to exercise due diligence so that they do not engage in transactions involving Russian crude oil imported into the EU (DC World News, 15 August 2022).

The UK's Russia regulations prohibit UK companies from providing, directly or indirectly: technical assistance; financial services, and funds and brokering services relating to the import, acquisition, and supply and delivery of Russian-origin oil and oil products into the UK.

Funds means financial assets and benefits of every kind, including L/Cs, guarantees, bills of lading, bills of sale and any other instrument of export financing (DC World News, 28 November 2022).

The Energy Intelligence article, Russian Crude Trade Moves Deep Into the Shadows, can be found here.

The EC notice, Imports of Russian crude oil or petroleum products into the Union, can be found here.

Full details and guidance on the UK ban on Russian oil and oil products can be found here.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.