Procurement: The Danish Straits and Russian Oil Smuggling


December 9, 2023: The Danish Straits are the only exit from the Baltic Sea to the North Sea and the Atlantic Ocean. Russia uses this route to move two million barrels of oil exports a day. That requires about three Aframax class tankers. The Afra stands for, Average Freight Rate Assessment. This is about insurance for the ship and its cargo of oil and is popular with this ships that transport about 600,000 barrels of oil. This is a popular capacity because tankers that size can user most ports to unload the oil after docking and connecting to a local oil pipeline system. Larger tankers require a deepwater oil discharge point father out to sea where the water is deep enough to handle the deep draft of tankers that carry two million or more barrels of oil.

Russia has a problem with its oil exports because of Western economic sanctions imposed after Russia invaded Ukraine in early 2022. The sanctions sought to put limits on how much money Russia could make with its oil exports. The sanctions limited how much oil Russia could export and how much they could charge for it. This led to less oil entering world markets and that drove up the average oil price. That was another incentive for Russia to smuggle oil and that’s what was going on in the Danish Straits, where unidentified, and possibly uninsured, Aframax tankers were believed to be carrying Russian oil to international customers that were willing to accept smuggled oil, especially at a slightly lower price to reflect the risks of dealing with illegal goods. Much of the smuggled oil went out via the Danish Straits because the Danes only had a few small (280 ton) Diana-class Patrol Vessels to police this traffic and these boats were not enough. Their armament consists of two 12.7mm machine-guns per boat and a crew of nine. That’s not enough firepower to intimidate a much larger tanker and not enough sailors for boarding parties to inspect the tankers.

Once in the North Sea and then the Atlantic Ocean, the unidentified, unregistered and possibly uninsured tankers carrying embargoed Russian oil head for distant ports where cargoes of petroleum lacking the proper paperwork are purchased at a discount. The sanctions limit the price of Russia can receive for its oil to $60 a barrel. If Russia can effectively conceal the origins of its oil exports, they can get a higher price. The smaller Aframax type tankers are the perfect size for oil smugglers because Aframax class ships are able to dock and unload cargo in just about any commercial port.




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