Mar 6 2024: Recent data and interviews reveal a significant shift in the flag registration of oil tankers used by Russia, following intensified U.S. sanctions enforcement. Dozens of these tankers have ceased operating under Liberian and Marshall Islands flags, which are closely tied to U.S. jurisdiction due to administrative headquarters located near Washington D.C.
The relationship between the U.S. and these flag administration companies has led to increased scrutiny, particularly amidst sanctions targeting Russian oil exports. Sanctions, such as the $60 per barrel price cap imposed by the G7, EU, and Australia in December 2022, restrict the use of Western maritime services for tankers transporting Russian oil at or above the cap.
Since October, the U.S. Treasury Department has imposed sanctions on numerous oil tankers for violating this price cap, with many flagged under Liberia and the Marshall Islands. While some tankers have transitioned to the Gabon flag to evade sanctions, this move doesn’t eliminate liability, leaving them vulnerable to sanctions enforcement.
The situation has led to tankers being stranded outside ports, creating financial burdens for their owners and cargo holders. Market players are also wary of dealing with these vessels due to the risk of sanctions.
Furthermore, switching flags to Gabon may not entirely alleviate risks, as port authorities may still scrutinize tankers carrying Russian oil. The U.S. and its allies are pressuring flag registries to tighten oversight to prevent the transportation of Russian oil above the price cap.
The sanctions enforcement aims to deter evasion tactics and restrict Russia’s use of its oil fleet, thereby redirecting more volume to compliant fleets. U.S. officials emphasize ongoing vigilance in addressing shipping practices related to Russian oil exports above the price cap, indicating a commitment to continued action.
