EU sanctions on Russian oil from Monday

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The European Union’s sanctions on Russian oil will take effect on Monday, and energy markets are headed for uncharted waters in the months ahead. Meanwhile, EU officials have agreed to set a price cap on Russian oil at $60 a barrel as OPEC+ meets Sunday to discuss crude production, adding more uncertainty to the immediate future. Shipping costs for Russian crude are skyrocketing as more tanker owners shun the trade days before the sanction take effect. Owners who are still willing to load Russian crude are attempting to charge more for the risk. Baltic Sea-to-India rates are being discussed at about $15 million — or $20 a barrel — for loadings after Dec. 5 when new EU restrictions kick in, said shipbrokers. That’s a sharp increase from $9 million to $11.5 million before. The US has said ships loaded with Russian oil before December 5 and unloaded at destinations before January 19 won’t be subject to the price cap. The lack of clarity surrounding exemptions is paving the way for a shift to the so-called dark fleet, or tankers held by undisclosed owners who are willing to continue handling Russian oil despite the threat of sanctions. These ships mostly comprise of older vessels and many with a track record of dealing with sanctioned regimes.

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