Tankers owned by Sovcomflot struggled to find destinations shortly after the Russian invasion of Ukraine as countries either banned imports of Russian oil or Russian vessels docking at their ports, all this while many traders and buyers refuse to deal with Russian crude.
Insurers have also backed out of covering potential liabilities for tankers owned by Russia’s state tanker fleet operator.
The recent uptick in the use of Sovcomflot tankers, mostly for destinations in India and China, could help Russia redirect more of its crude - cheaper than Dated Brent by around $30 a barrel now - to buyers in Asia who are not afraid to purchase Russian oil, especially at these bargain prices.
For example, 9 tankers owned by Sovcomflot have delivered or are about to deliver crude oil to India from western Russia since Putin launched the invasion of Ukraine, compared to not a single Sovcomflot tanker on that route last year, according to data compiled by Bloomberg.
China and India aren’t shying away from Russian crude, although some Chinese state giants haven’t ramped up imports of spot cargoes from Russia despite the steep discounts at which Russian oilis selling.
In India, cheap Russian oil is attracting India’s price-sensitive buyers to the point that Russia became the 4th largest oil supplier to India in April, moving up from the 10th place in March, according to shipment-tracking data compiled by Reuters.