Cutting Russia’s Oil Lifeline: 6 Steps for the EU to Tackle Maritime Trade

Revenue from crude oil and petroleum product exports remains the largest external source of funding for Russia’s military expenditures, including purchases of military equipment and dual-use goods abroad. As long as this revenue continues at current levels, Russia’s war against Ukraine will persist, placing significant financial burdens on EU countries, writes Andriy Klymenko.

The longevity of the war, and consequently the duration of Europe’s financial support for Ukraine and bolstering its own security, is largely influenced by the volume of maritime crude oil exports from Russian ports on the Baltic Sea.

Table 1:

These exports account for approximately 60% of Russia’s total maritime oil shipments. Physically, this equates to 10–12 million tonnes of crude oil per month, transported by 90 to 100 tankers monthly.

Table 2:

For this reason, the EU, or a coalition of Baltic Sea countries including Norway and the United Kingdom, will inevitably have to impose restrictive measures on this maritime oil trade. The global geography of oil logistics leaves no alternative to this approach.

However, it should be anticipated that Russia will respond with heightened hysteria and intimidation tactics.

Fighting a “Phantom Fleet”

Based on our experience, attempting to combat Russia’s so-called “shadow fleet” is futile. One cannot fight what does not exist.

In reality, there is simply a fleet of tankers transporting Russian crude oil and petroleum products worldwide. This fleet is not “shadowy” for those willing to see it.

Equally fruitless are debates over the effectiveness of the “price cap.” Such a mechanism, in practice, does not function.

The so-called price cap mechanism has been ineffective because it lacks safeguards against falsified documentation regarding tanker cargo value. Moreover, since 2022, contracts adhering to the price cap have been explicitly banned by a decree from the Russian president and are strictly enforced.

Public discussions about the price cap in global media and expert circles primarily serve as a smokescreen for the reality that 30% of this crude oil is transported from Russian ports using tankers owned by companies registered in Greece.

Table 3:

The correct approach to this challenge is to focus on reducing Russia’s maritime exports of crude oil and petroleum products. This trade represents the primary external source of funding and prolongation of Russia’s aggression against the civilised world.

In September 2024, Russia’s total maritime export of crude oil (excluding petroleum products) reached approximately 20 million tonnes, based on our monitoring data.

Table 4:

Among Russia’s maritime export routes, the Baltic Sea stands out as the most significant, accounting for 60% of crude oil shipments. Its geopolitical and geographical context also makes it the most favourable region for implementing countermeasures.

It is evident that neither Ukraine nor its allies have the means to influence transportation routes in Russia’s Arctic or Far Eastern regions. Similarly, obstructing shipments through the Turkish Straits is challenging due to Turkey’s well-known policies based on Montreux Convention.

Insights into Russia’s Tanker-Based Oil Exports

The number of tankers involved in Russian oil exports from Baltic Sea ports (excluding LNG) ranges between 150 and 170 vessels per month (Table 2). Of these, approximately 100 are large crude oil tankers, each capable of carrying between 110,000 and 150,000 tonnes of oil.

Considering the repeated (cyclical) voyages of these vessels, the estimated total number of tankers transporting Russian crude oil and petroleum products from the Baltic and Black Sea ports over the past six months is around 900–1,000. Of this number, approximately 300–400 are crude oil tankers classified as “Type of Ship: Crude Oil Tanker.”

Key Observations:

• Over 30% of these shipments are carried out by tankers owned by Greek companies (Table 3).
• When combined with tankers registered in Cyprus and Moldova (an EU candidate country), companies from “EU+” countries account for 34.2% of this segment of the tanker market.
• In contrast, vessels registered in “flags of convenience” countries (offshore jurisdictions where actual ownership can be obscured) represent only 10–12% of the market.

Destinations for Russian Oil:

Monitoring data shows that around 93% of Russia’s crude oil exports are destined for India, China, Singapore, and Turkey. Meanwhile, up to 7% of crude oil from Russia’s Baltic and Black Sea ports is transferred via ship-to-ship operations off the coasts of EU countries.

Occasionally, shipments even reach EU ports directly, constituting clear violations of the embargo.

For petroleum products, the distribution ratio is slightly different, with approximately 83% heading to non-EU countries and 17% entering EU-affiliated waters, often through indirect means.

Will Insurance Restrictions Be Effective?

On 16th December, countries bordering the Baltic and North Seas signed a declaration in Tallinn to strengthen insurance requirements for tankers carrying Russian oil.

This move appears to be an initial step to gauge practical reactions and enforcement challenges.

Insurance Coverage of Russian Oil Tankers

As of September 2024, data indicates that 99 tankers were involved in transporting Russian crude oil. Of these, 45 tankers—representing 45.5%, or nearly half—held Protection and Indemnity (P&I) insurance policies. The remainder were insured by companies based in India, China, and other countries.

This evidence contradicts widespread media claims that the “vast majority of tankers” are uninsured.

A Similar Precedent in Turkey

A similar measure was announced by Turkey on 1 December 2022. The Turkish government declared it would close the Bosphorus and Dardanelles Straits to oil-carrying vessels without P&I insurance coverage.

However, this policy did not lead to significant changes, and no further updates on its implementation have been reported.

What Can the EU Realistically Do?

What steps can Western countries take to reduce the volume of Russian crude oil and petroleum product shipments via maritime routes?

Step 1: Declare a “Special Period”

The EU (or a coalition of EU and NATO countries bordering the Baltic and Black Seas) should declare a “special period” during which certain norms of international maritime law and agreements on freedom of navigation, passage, and transit are temporarily suspended until Russian aggression ends.

International maritime law, particularly the United Nations Convention on the Law of the Sea (UNCLOS), is essentially “peacetime law.” Its framework is insufficient to address the ongoing geopolitical crisis. Measures based on the “special period” principle would enable partner nations to implement actions that may not fully align with the legal standards of peacetime maritime law.

Step 2: Prohibit EU-Based Shipowners from Transporting Russian Oil

The EU must categorically prohibit all EU-based shipowners from transporting Russian crude oil and petroleum products from Russian ports. This measure could immediately reduce export volumes by 30% and temporarily create a shortage of tankers for Russia.

Step 3: Impose Sanctions on Tankers Transporting Russian Oil

The EU (or a coalition of Baltic Sea-bordering EU and NATO countries) should quickly add all tankers documented over the past six months as transporting Russian crude oil and petroleum products to sanctions lists. These sanctions should ban access not only to territorial waters, ports, and anchorages but also to pilotage and other maritime services within the EU.

The mere initiation of this process would exert significant pressure on tanker owners, discouraging participation in Russian oil trade.

Step 4: Mandate Pilotage in Danish Straits

The EU (or at least a coalition of Baltic Sea-bordering countries) should temporarily impose mandatory pilotage for all tankers transiting the Danish Straits, which connect the Baltic and North Seas. Additionally, sanctioned vessels should be prohibited from using pilotage and other maritime services, effectively sealing the sole maritime route from Russian Baltic ports for tankers carrying “blood oil.”

Step 5: Assess Economic Impacts

Simultaneously, expert discussions should evaluate the potential effects of these measures on global oil prices. Steps must also be taken to counteract possible Russian actions aimed at exacerbating global price spirals.

Step 6: Strengthen Sanctions on Ship-to-Ship Transfers

The EU must strengthen and clarify its sanctions regime, imposing a categorical ban on EU ports accepting tankers carrying oil or petroleum products loaded via ship-to-ship transfers. This would quickly reduce the volume of Russian oil and petroleum products entering the EU in violation of the embargo, currently estimated to account for up to 10% of Russia’s oil exports.

Russia’s Potential Response

Efforts to restrict Russian maritime oil exports from the Baltic Sea face additional challenges due to Russia’s strategy of leveraging geopolitical manoeuvres to drive up global oil prices.

Manipulating Oil Prices

Russia has already begun taking steps to increase global oil prices, as any downward trend is unacceptable for a nation financing an aggressive war.

• In August 2024, no tankers were observed departing Russian Baltic ports and heading east via the longer route around Africa, avoiding the Suez Canal and the Red Sea.
• By September, seven such instances were recorded, rising to 13 in October.
• This shift aligns with reports from global media in September 2024 about Russia potentially supplying anti-ship missiles to Houthi extremists for use against vessels in the Red Sea.

This alternative route to India, Singapore, or China adds 12–14 days to travel times, significantly increasing costs.

It is anticipated that Russia’s Houthi allies may be tasked with launching a coordinated series of attacks on tankers in the Red Sea at an opportune moment. Such actions would aim to incite panic in oil markets and drive up global prices.

The emergence and increase in the number of tanker voyages along the route around Africa, heading to India, Singapore, and China from Russian ports in the Baltic Sea, are caused by the leak of information regarding these intentions to “friendly” shipowners.

Disrupting Kazakh Oil Exports

Another potential Russian tactic involves targeting Kazakh oil exports to the EU. Since the EU imposed its embargo on Russian crude, member states have replaced Russian oil with Kazakh CPC oil from Black Sea ports.

Russia could exploit this reliance by creating artificial disruptions under various pretexts, such as:

• Adverse weather conditions.
• Technical malfunctions.
• Environmental compliance demands.
• Court rulings orchestrated by Russian authorities.

Such disruptions were demonstrated in March and July 2022.

Between December 2022 and September 2024, EU imports of Kazakh CPC crude oil via the Black Sea amounted to approximately 99.6 million tonnes, or an average of 4.5 million tonnes per month.

Key EU Importers at Risk

If Russia interrupts Kazakh oil exports, the most affected EU countries would be:

• Italy: The largest importer of CPC oil from the Black Sea, accounting for 45% of imports as of September 2024.
• Netherlands, Greece, France, and Spain: Each importing 10–15%.

Recommendations

To mitigate risks, measures to restrict Russian oil exports should be implemented gradually and in coordination with partners such as the United States and other energy-exporting nations seeking to expand their market share.

Furthermore, our recommendation to EU countries is that, in the context of Russia’s aggressive war against Ukraine and the Ukrainian resistance, which shows no signs of diminishing, it would be advisable to eliminate such energy import flows that pass through combat zones.

Kazakhstan’s plan to reroute a significant share of its oil via the Baku–Tbilisi–Ceyhan pipeline is timely but will likely face resistance from Russia.

The EU must act decisively to diminish Russian oil revenues, which sustain its war against Ukraine and threaten global security.

By Andriy Klymenko, Head of the Monitoring Group of the editorial team at BlackSeaNews and the Black Sea Institute of Strategic Studies.