Dark Fleet Oil Tanker Train Carrying Russian Crude to Indian Refineries Exposes Weakness of G7 Sanctions

Chinese and Indian Oil Traders Bypass Western Sanctions

Chinese and Indian oil traders have contributed significantly to the surge in dark fleet tankers transporting Russian crude to Asia, thereby circumventing Western sanctions.

A new report titled "BRICS+ Energy: Engine of the New World Order" from the Valdai International Discussion Club, penned by Deputy Head of the National Energy Security Fund Alexey Grivach, was initially cited by Russian media outlet TASS News. The report revealed that due to G7 sanctions, Russia's oil exports were redirected from Europe to Asia. In 2023, the highest demand for Russian crude oil came from two BRIC countries: India and China.

Impact of G7 Sanctions on Russia's Oil Exports

The report stated, "When the G7 countries decided to crush the Russian economy and energy sector with sanctions, alternative trade mechanisms, including transportation, insurance and payments for energy had to be created in a hurry and practically from scratch. Oil supplies from Russia to India in 2023 increased 18 times compared to 2021 from 4.5 mln tons to 82 mln tons, and to China - by a third from 80 mln tons to 107 mln tons. As a result, 78% of Russian crude oil exports went to these two BRICS partners, whereas in 2021 their share was 32%."

Robin Brooks, a senior fellow at the Brookings Institute, highlighted that India's imports from Russia soared by 900% compared to the pre-invasion period. He attributed this mainly to Russian crude being sent to India for refining and then being "shipped back to Europe." He further added, "It'd be fine if this happened on Western-owned oil tankers in compliance with the G7 cap. But this happens on shadow fleet vessels. That helps Putin..."

Role of the Dark Fleet in Oil Trade

Anas Alhajji, an energy market expert based in Dallas, drew attention to a train of oil tankers passing through the Red Sea and the troubled waters of Bab Al Mandab near Yemen, all carrying Russian Urals crude.

TankerTrackers.com illustrates how the global oil tanker Dark Fleet is being utilized. Essentially, Russia and other US-sanctioned countries are outmaneuvering Washington and Brussels.

India's Crucial Role in Global Oil Trade

India is a key player in the global oil trade due to its extensive refineries. Russian crude oil is converted into crude products in these refineries and then exported to the West. This process is undermining G7 sanctions against Moscow.

Brooks pointed out in mid-July, "India has become a massive refinery for Russian oil. That'd be fine if Russian oil went to India on Western ships operating under the G7 cap, but lots of this oil gets shipped on Putin's shadow fleet, which means India is helping fund Russia's invasion of Ukraine. This must stop."

Long-Term Impact of Failed Western Sanctions

The key takeaway is that the unsuccessful Western sanctions have only hastened the de-dollarization trend, thereby affecting the US dollar's international status in trade. This implies that dollar hegemony is in serious trouble in the long run.

Bottom Line

It's clear that the Western sanctions have had unintended consequences, leading to an increase in clandestine oil trade and potentially undermining the dominance of the US dollar in global trade. This raises questions about the effectiveness of such sanctions and whether they are achieving their intended goals or simply leading to the creation of alternative trade mechanisms. What are your thoughts on this issue? Feel free to share this article with your friends and engage in a discussion. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.