US Sanctions Target Russian Oil Tankers Still Under Construction

In a first-of-its-kind move, the United States has imposed sanctions on six Russian oil tankers still under construction at Russia's Zvezda Shipyard.

As a final act before the new administration took over, the Biden administration's recent sanctions target vessels before they have even set sail or carried any sanctioned cargo. This shows Washington's determination to limit Russia's ability to export oil and develop its own fleet.

A review by Reuters revealed that these six tankers, still being constructed at Zvezda, are among 183 vessels affected by the sanctions. Notable among them are the Nursultan Nazarbayev, the Alexander Beggrov, and the Alexey Bogolyubov, along with three unnamed vessels: Zvezda 131080, Zvezda 131060, and Zvezda 131040. 

According to the sanctions' details, Russia's state-owned shipping company Sovcomflot is purchasing the Alexander Beggrov and the Alexey Bogolyubov, while Rosneft's shipping division, Rosnefteflot, is acquiring the other four tankers. Both Sovcomflot and Rosnefteflot are also under US sanctions.

The sanctions aim to disrupt Russia's so-called “shadow fleet,” which Moscow has used to circumvent a price cap imposed by the G7 countries in late 2022. This cap prohibits insurance and shipping services from western providers for Russian oil sold above $60 per barrel. 

An industry source involved in Russian oil trading indicated that including tankers still under construction in the sanctions could discourage Russia from completing these costly projects.

As a result of the sanctions, Russia is facing a significant shortage of oil tankers for its exports. Over 60 per cent of the listed oil tankers have entered Russian ports in the past two months, according to Reuters' analysis based on shipping data. 

The shortage of tankers has already led to a dramatic increase in freight rates worldwide, affecting global shipping and logistics networks.

Established in 2015, the Zvezda Shipyard - a prominent Russian shipbuilding facility, and the only one in the country capable of producing large-capacity oil and gas vessels - has itself also been subjected to US sanctions.

The implications of these sanctions are far-reaching, impacting not only Russia's oil exports but also the global oil market and shipping industry. 

Sanctions support with Shearwater Law

Geopolitical events have made sanctions a pressing concern for everyone in the shipping industry. 

Vessel owners, charterers, commodity traders, and individual business owners all face the potential repercussions of breaching sanctions, which can have severe consequences. 

Shearwater Law is well-versed in the intricacies of sanctions imposed by major international bodies. Whether you are encountering sanctions for the first time or need assistance with a sanctions dispute or investigation, Shearwater Law is equipped to provide the necessary support and guidance.

Contact Shearwater Law today