January 29, 2024 [Oil Price]- About 10 million barrels of Russian crude oil have been stranded off the coast of South Korea thanks to U.S. sanctions, traders and shipping data told Reuters on Friday.
The 10 million barrels, carried by 14 tankers, are of the Sokol variety from Sakhalin-1 and remain unsold due to Western sanctions. That amount represents about 45 days’ worth of Sakhalin-1 production at its average rate of 220,000 barrels per day.
The vessels—including 3 VLCCs—carrying the Russian crude oil have been stranded near the port of Yosu in South Korea for weeks after the United States sanctioned multiple vessels and companies that were transporting the Sokol grade.
Reuters sources and shipping data courtesy of Kpler and LSEG indicate that the VLCCs, carrying 3.2 million barrels, have been acting like floating storage.
At least some of the Sokol crude oil was destined for Indian Oil Corp. The delays in delivery caused by payment problems have caused Indian Oil Corp to search for crude from elsewhere—mainly from its own storage and the Middle East.
The United States initiated sanctions and a price cap on Russian crude oil transiting by water more than a year ago. The intent was not to disrupt the flow of oil, but to restrict revenues to Russia, who would otherwise use crude oil money to fund its military operations in Ukraine. The Biden Administration has insisted that its sanctions and G7 price cap have been effective, despite the accusations from some that they have been largely ineffectual.
The Kyiv School of Economics estimated in December that Moscow would bring in $178 billion from oil sales in 2023—and predicted that this figure would rise in 2024. According to the Centre for Research on Energy and Clean Air, the import ban and price cap have cost Russia $37 billion in export revenue. “The price cap has had an impact but has failed to live up to its potential” CREA analysts said last December.
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