640
Views

Tanker Sanctions Hit Russia's Kozmino Oil Export Terminal

Kozmino
Tankers at the Kozmino oil terminal on Russia's Pacific coast. The ESPO blend sold from Kozmino has traded above the G7 price cap since it began in 2022 (file image)

Published Jan 21, 2025 9:37 PM by The Maritime Executive

 

The Russian port of Kozmino is a reliable earner for the nation's oil and gas sector, pumping out 900,000 barrels a day of premium Siberian crude for Chinese buyers. Kozmino's ESPO blend has consistently sold at full-rate market prices despite two years of Western sanctions, with few interruptions. That now appears to be changing due to U.S. sanctions on the "dark fleet," the collection of obscurely-owned, aging tankers that circumvent the G7 "price cap" on Russian crude exports. 

Earlier this month, the Biden administration imposed blocking sanctions on 180 Russian vessels, including about 160 tankers. The package targeted ships operated by state-owned Sovcomflot, as well as a collection of older ships held by anonymous firms. U.S. Treasury blocking sanctions create serious compliance risks for any entity that interacts with the sanctioned vessel, and a key stakeholder in the "dark fleet" trade - Shandong Port Group, the giant Chinese refining complex - let it be known that it would no longer accept sanctioned tankers. 

This package of sanctions covered about three-quarters of the tanker fleet that serves the short run between Kozmino and coastal ports in China, including Shandong. According to Bloomberg, the anchorage near the Kozmino loading terminal is now filling up with idle vessels, with nine tankers sitting just offshore - many more than normal. 

Even if Russia is able to source new unsanctioned tonnage to continue the trade at normal volume, the price of transport will go up. Given the clear risk of a vessel getting sanctioned for calling at Kozmino, Aframax charter rates for the run have skyrocketed, with brokers reporting prices of up to $5-7 million for a single voyage. 

More sanctions may be coming under the Trump administration. Over the past two days, President Donald Trump has suggested that Russian President Vladimir Putin needs to negotiate an end to his war in Ukraine, and that more penalties are possible if he doesn't. 

"I think he's destroying Russia by not making a deal. I think Russia's going to be in big trouble. You take a look at their economy. You take a look at inflation in Russia," Trump said Monday. 

In conversation with reporters on Tuesday, Trump said that it "sounds likely" that if Putin does not begin peace talks, more sanctions might be on the table.