(Bloomberg) — The amount of oil stranded off the Chinese coast is growing as traders, refiners and shipping companies try to avoid being caught up in the US’s strictest-ever sanctions on Russian energy flows.
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Five tankers carrying almost 4 million barrels of ESPO and Sokol crude from the Russian Far East that should have delivered their cargoes by now are idling in Chinese waters, according to ship-tracking data from Bloomberg and Kpler. Four of those vessels were sanctioned by the US.
Companies involved in the Russian oil trade have been scrambling for solutions since Washington sanctioned more than 180 tankers, as well as traders and insurers, on Friday. While there’s a wind-down period in which crude can be offloaded before the penalties take effect, many ports in Shandong province, a hub for independent refiners, are wary of handling the crude after a warning from a major terminal operator.
There could be an increase in ship-to-ship transfers of oil in response to the sanctions, and more smaller ports being used, shipbrokers said. Crude from the Russian Far East is popular with China’s so-called teapot refiners due to it being relatively cheap and the short travel time.
The amount of stranded crude has almost doubled from a couple of days ago and is expected to keep growing for the foreseeable future. The volumes don’t include oil on the Madestar, a very-large crude carrier that recently did a ship-to-ship transfer with another vessel carrying ESPO, the tracking data show. Three other tankers carrying the grade are set to offload in China in the coming days.
—With assistance from Weilun Soon.
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