OIL: Russian Intermediaries to Grow Unless Sanctions Enforcement Tightens: Kpler

The increase in Russian crude oil intermediaries reflect a fundamental restructuring of Russia’s energy export system, according to Kpler. Russian oil marketers are using a growing network of offshore single-purpose vehicles, shadow-fleet operators and producer-adjacent entities to aid trade flows.

• Russia’s export system is set to grow even more fragmented and opaque, unless sanctions enforcement tightens on intermediaries and shadow fleet networks.
• Use of intermediaries now capture about 30% more of Russia’s oil exports year-on-year to replace part of the market share previously held by Rosneft and Lukoil prior to the tightening of sanctions.
• Shipments involve companies registered in the UAE, Hong Kong, Turkey, Central Asia and the Caucasus. These companies are often incorporated shortly before their first loading and share corporate service providers or directors with shadow-fleet operators.
• Shadow-fleet tanker operators have also established parallel trading companies in separate offshore jurisdictions to facilitate trades.
• Intermediaries have gained market share by providing terms that Rosneft and Lukoil cannot match under current restrictions including offering flexible price discounting and financing outside the price cap.