Vessels delivering Russian diesel are ‘sailing through a loophole’

Over the weekend a tanker delivered 33,000 tonnes of Russian diesel to a UK port despite government-imposed sanctions under which Russian-owned or flagged vessels are now banned from UK ports.

The ship that delivered the fuel into Grays, Essex is the STI Comandante. Owned as it is by the US firm Scorpio Tankers and flying the flag of the Marshall Islands, a nation in the Pacific Ocean, it was not flouting the Ukraine-related sanctions but, rather, exploiting a loophole that allows Russian fossil fuels to continue to be delivered to the UK, despite the ban on Russian vessels.

In response to the delivery of Russian diesel, Emily Armistead, programme director at Greenpeace UK, said: “The government’s sanctions against imports of fossil fuels from Russia contain a loophole so large oil tankers are sailing right through it.

“A ban on Russian-flagged and Russian-owned tankers simply isn’t enough, there needs to be an explicit and immediate ban on Russian oil and gas too. This shipment of diesel, along with other fossil fuels that have been allowed to enter the UK since Russia’s invasion of Ukraine, is filling Putin’s coffers and helping to fund the war. It has to stop.”

Global diesel shortages

With the UK having pledged to stop importing Russian diesel by the end of the year rather than immediately, the deliveries continue and only serve to highlight our dependency on Russia. Phasing out Russian oil will be extremely hard, but diesel will be especially challenging since Russia supplies 8% of the UK’s oil needs but 18% of its diesel, according to government figures.

As previously reported, diesel supplies were tight before the Ukrainian crisis began, with an increased demand as lockdowns lifted that producers failed to keep pace with and global stocks already lower than had been understood.

Whilst there is no ‘slack’ left in the system, there is no suggestion that pumps will run dry anytime soon but, with many other countries also looking to replace their Russian supplies, it’s possible there will be diesel shortages around the world. Europe depends on Russia for around half its diesel imports.

“The diesel market is extremely tight and we’re possibly heading to stock-outs. Europe can probably afford to pay. The problem is what happens to Africa and Latin America,” Jeremy Weir, the chief executive of Trafigura said on 22 March, according to the Reuters news agency.

It is the anticipation of shortages that has led, in part, to a rapid escalation in the price of diesel at the pumps – 18% since the end of January which outstrips the rise of 11% in unleaded. This disparity “reflects the fact that the biggest immediate problem at the moment for the end user is diesel,” according to Neil Crosby, senior oil analyst at OilX.

With some shipping lines having suspended deliveries from Russia, it is this supply problem that has led some, including the operators of the STI Comandante, to make the controversial choice to continue.