Russian crude ships change course amid concerns over oil payments

Several vessels transporting crude oil from Russia, previously idling off the coast of India, are now changing their course eastward, raising concerns about oil payments to Moscow and resulting in a decline in arrivals. Vessel-tracking data reveals that five ships, including the NS Commander, Sakhalin Island, Krymsk, Nellis, and Liteyny Prospect, all carrying Sokol oil from Russia’s Far East, are now moving towards the Malacca Strait, located between Indonesia and Malaysia, at speeds ranging from 7 to 10 knots. Meanwhile, a sixth vessel, the NS Century, also transporting Sokol oil, remains in proximity to Sri Lanka.

Analysts suggest that China may have intervened to salvage the stalled Sokol cargoes. Viktor Katona, lead crude analyst at data intelligence provider Kpler, noted that China seems to have stepped in to save the idling Sokol cargoes.

The decline in India’s oil imports from Russia, crucial for Moscow amid the conflict in Ukraine, was evident in December 2023, reaching the lowest levels since January 2023. Local refiners faced disruptions, failing to receive any Sokol cargo due to payment issues, according to Kpler.

Sanctions imposed by the U.S. and its allies on entities breaching the $60-a-barrel cap on Russian crude exports, effective since late 2022, have intensified. In the past month, a senior Treasury official emphasized the heightened enforcement of these sanctions.

The NS Century, capable of hauling approximately 700,000 barrels, had already faced sanctions from the U.S. Treasury in 2023. The remaining vessels, carrying similar volumes, are mostly owned by Russia’s state-backed shipping company, Sovcomflot PJSC.

As the vessels alter their routes, the situation underscores the intricate dynamics surrounding the international oil trade, influenced by geopolitical events and sanctions imposed by major players in the global arena.