Russian oil is flowing, but increasingly under the radar


Russia has ramped up oil supplies to key customers in recent weeks, challenging its pariah status in world energy markets. An increasingly popular delivery method: tankers marked “Destination Unknown”.

According to, oil exports from Russian ports to European Union member states, which historically have been the biggest buyers of Russian crude, rose to an average of 1.6 million barrels a day in April. Exports had fallen to 1.3 million a day the following March the Ukraine invasion. Similar data from Kpler, another commodities data provider, showed that flows rose to 1.3 million per day in April from 1 million in mid-March.

But an opaque market is forming to disguise the origin of this oil. Unlike before Russia invaded Ukraine, oil buyers are concerned about the reputational risk of the crude oil trade, which funds a government accused of war crimes by Western leaders.

Oil from Russian ports is increasingly being shipped to an unknown destination. According to, more than 11.1 million barrels have been loaded onto tankers without a planned route so far in April, more than to any other country. That’s more than almost none before the invasion.

The use of the “destination unknown” label is a sign that the oil is being taken to larger vessels at sea and offloaded, analysts and traders said. Russian crude oil is then mixed with the ship’s cargo, blurring its origin. This is an ancient practice that has enabled exports from sanctioned countries like Iran and Venezuela.

The ship Elandra Denali was off the coast of Gibraltar last week when it received three cargoes of oil from tankers sailing from the ports of Ust-Luga and Primorsk in Russia, according to the ship’s operators, people involved in the transhipment and two ship-tracking companies. The ship’s records show that it departed from Incheon, South Korea, and plans to arrive in Rotterdam, a major refinery port in the Netherlands.

According to traders, new grades of refined products called Latvian blend and Turkmen blend are also being offered in the market with the understanding that they contain significant amounts of Russian oil, they said.

Oil sales for Russia are the lifeblood of the economy and government spending. The country struggled to sell oil in the same quantities and at the same prices as before the war, causing backlogs in its domestic oil industry.

The US, UK, Canada and Australia have banned the import of Russian oil. The EU is more dependent on Russian energy, importing 27% of its oil from the country. European leaders have debated whether to impose an embargo as well, but have yet to act as they balance a desire to isolate Russia without inflicting pain on their own economies with higher energy prices.

Despite the lack of sanctions, many European energy companies restrained themselves in the weeks following the invasion, as bank financing for trade dried up and insurance costs soared. Oil exports from Russia fell in March, leading to a rise in domestic inventories and lower production from some refineries.

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The spike in shipments to Europe in April, as well as shipments marked with no destination, suggests some companies are finding workarounds.

“Full sanctioning of Russian oil by the European Union would be like saying you have to cut your salary by 40% tomorrow and carry on living as if nothing happened,” said Giovanni Staunovo, a commodities analyst at UBS Group Inc.

“Meanwhile, there are huge discounts for Russian oil in the market. Some will find this environment very attractive.”

A popular Russian crude known as the Urals is between $20 and $30 below the Brent benchmark, according to traders. Before the invasion, it was usually at or a dollar or two below the benchmark. Russia has struck some deals to sell oil to buyers in India.

Much of Russian oil is still marked with clear destinations on shipping documents. Casks destined for Romania, Estonia, Greece and Bulgaria have more than doubled this month compared to March averages. Volumes also increased significantly for the Netherlands, the largest customer in Europe, and Finland.

Some shoppers are rushing to do business in anticipation of possible new restrictions, while others say they are doing business done before the invasion. Sanctions would force them to break those treaties.

“The fact that they’re buying more than they did before the invasion suggests it’s not just because of long-term contracts,” said Simon Johnson, an MIT economics professor who studies oil geopolitics and a former chief economist at the International Monetary Fund. “It’s also about cheap energy. Until there is a full embargo, this can continue.”

Oil majors and commodity trading houses, including Royal Dutch Shell PLC, have rallied in recent weeks,

SHEL 0.23%

Repsol SA,

Exxon Mobil Corp., Eni SpA,

According to Global Witness, a research and advocacy group working with the Ukrainian government, and Refinitiv data, Trafigura Group and Vitol Group have chartered ships to transport crude oil from Russian Black Sea and Baltic Sea oil terminals to ports in the European Union . The shipments arrived in Italy, Spain and the Netherlands this month, the data showed.


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A Repsol spokesman said recent supplies were tied to long-term commitments made before the invasion. Shell, Exxon and Eni said they were transporting oil from Kazakhstan through a Russian port. Trafigura and Vitol did not immediately respond to requests for comment.

Shell said on April 7 that it would stop buying Russian oil on the spot market, but that it was legally required to accept crude due to contracts signed before the invasion. The company defines refined products as of Russian origin when blends contain 50% or more, and leaves the door open to trading products such as diesel when it contains 49.9% Russian oil or less.

The Ukrainian government sent a letter to Shell CEO Ben van Beurden on April 13, criticizing the move and stating that “the notion that any company will continue to fund Putin’s war machine through an accounting trick is unfortunate.”

“It is a national disgrace for many governments and institutions that are funding these aggressions against us,” said Oleg Ustenko, economic adviser to the Ukrainian president.

A Shell spokesman said the company’s “self-imposed restrictive measures go well beyond any European Union measures in force today”.

EU officials are drafting a plan for a possible embargo, but the timing is still under review due to the upcoming French election and opposition from Germany. An embargo would probably only be implemented over time. Some fear traders are already working out ways to keep the oil flowing.

“Even if we see some kind of EU oil embargo, will they think about sanctioning the tankers? More ship-to-ship transfers away from the coast is a reasonable expectation,” Mr Johnson said.

— Benoit Faucon contributed to this article.

Write to Anna Hirtenstein at [email protected]

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