How Russia Might Replicate Iran’s Export Tricks

Russian oil exports to the West continue. Besides the US ban, which gives buyers a 45-day wind-down period, and the UK’s plan to discontinue imports by year's end, there are no sanctions prohibiting European companies from buying Russian oil. But a string of announcements by Europe's oil majors and some European refiners that they will phase out purchases of Russian crude and products suggest that reputational risks could make continued sales difficult. It also raises the possibility of clandestine trade emerging, similar to what Iran has achieved under US sanctions. Reasons why it could be easier for Russia include sky-high prices, the plethora of players, and resistance to an outright ban from the likes of Germany, Russia’s top European customer. Preliminary Energy Intelligence estimates show Russian crude exports via its Baltic and Black Sea ports in fact rising in the first three weeks of March to 1.8 million barrels per day, compared with 1.7 million b/d in February. As European refiners step back, others have stepped in, notably India. But much of Russia's crude exports appear to be destined for commercial storage, principally in Rotterdam. From there, the oil becomes very difficult to track. Russia’s oil product exports, meanwhile, have fallen sharply in the first three weeks of March, to 1.6 million b/d from 2.1 million b/d in February. But it has many traditional customers on its doorstep, and this market is even harder to monitor.