Russia Ignores 'Oil Export Sanctions'... Makes 1.3 Trillion Won by Inflating Shipping Costs

Exaggerating Transportation Costs While Exporting Crude Oil to India

There are suspicions that Russia is circumventing the West's oil price cap by inflating transportation costs when exporting crude oil, thereby securing profits. It has been revealed that the profits gained through this scheme to evade sanctions while selling oil to India exceed $1 billion (approximately 1.33 trillion KRW).

[Image source=Yonhap News]

According to an analysis of Russian customs records by major foreign media on the 15th, from December last year to the end of June this year, the price of crude oil transported from Russian Baltic ports to India was $50 per barrel. This is below the $60 per barrel price cap on Russian oil set by the Group of Seven (G7) and the European Union (EU) at the end of last year, so no additional sanctions are imposed.

However, Indian customs records show that the actual price India paid Russia for crude oil reached $68 per barrel. This means Russia charged $18 more per barrel by adding transportation costs and other fees. According to market research firm Argus, the commercial shipping cost for crude oil exported from the Russian Baltic Sea to India between May and July this year was $9 per barrel. Considering this, Russia appears to have inflated the transportation cost by more than double. Argus estimates that the additional profits Russia earned through this method amount to $800 million.

Furthermore, market research firm Kpler investigated 134 vessels transporting oil from the Baltic Sea to India between May and July this year. Of these, 23 vessels belonged to Russian shipping companies, and another 26 were identified as Russian-related ships. The transportation fees for the crude oil carried by these 49 vessels connected to Russia were estimated at approximately $350 million per quarter. Assuming these vessels also inflated transportation costs, Russia is estimated to have earned excess profits exceeding $1 billion by exporting crude oil to India.

Currently, India purchases one-quarter of Russia's crude oil exports. According to the International Energy Agency (IEA), Russia exported a total of $39 billion worth of crude oil in the past three months.

Benjamin Hilgenstock, a professor at the Kyiv School of Economics in Ukraine, pointed out, "It is highly concerning that Russia has caused leakages in the oil price cap system through inflated transportation costs."

However, foreign media analyzed that the incentive to purchase Russian crude oil has decreased as the discount on Russian oil has fallen from the previous $10 per barrel to about $2 per barrel due to recent oil price increases.

This content was produced with the assistance of AI translation services.