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Russia’s residual fuel oil exports resilient despite sanctions but Mexican exports could reshuffle under Trump

23 January 2025 Vortexa 


Russian residual fuel oil volumes lifted by the newly sanctioned fleet accounted for 15% of all Russian residual fuel oil exports in 2024. It is unlikely that Russia will continue to lift residual fuel oil on sanctioned vessels, as shown in the past 10 days whereby Russian product exports on these sanctioned tankers stopped completely from January 11-20. Despite the recent sanctions on Russia’s dirty fleet, Russian residual fuel oil exports remain resilient, with a 7% m-o-m decline in the first 19 days of January.


The latest round of US Office of Foreign Assets (OFAC) sanctions imposed on 155 tankers active in the Russia crude trade, effective January 10, targeted mainly the larger vessel classes, with 68% of the newly sanctioned vessels belonging to Aframax-size tankers and above. Meanwhile, smaller vessel classes face a relatively muted impact. The sanctions could tighten the potential fleet available to carry Russia’s crude (excluding CPC blend and KEBCO) and product exports, as Russian-origin oil accounted for 94% of the cargo carried during 2024 by this recently sanctioned fleet, averaging 1.64mbd in 2024.


Past OFAC sanctions have proven effective in reducing the employment of these vessels as compared to the United Kingdom and European Union sanctions. Hence, the speed at which Russia can replace the lost tonnage will largely depend on how swiftly non-OFAC-sanctioned tankers can facilitate these flows.


Greek operators can alleviate the tightening of Russia’s dirty product fleet

Russia’s residual fuel oil exports (kbd, LHS) and share of exports transported by OFAC-sanctioned vessels and Greek operators (%, RHS)
Russia’s residual fuel oil exports (kbd, LHS) and share of exports transported by OFAC-sanctioned vessels and Greek operators (%, RHS)

As with past sanctions, a boost in freight rates could attract global tanker operators to use their older tankers to service Russian residual fuel oil exports. In 2024, Greek operators loaded an average of 300kbd of Russian residual fuel oil, representing 38% of total residual fuel oil exports from Russia. Greek operators may increasingly enter/re-enter the Russian dirty product trade if freight rates rise high enough – though this likely has to coincide with steeper discounts to product prices. However, there might be a shortage in tonnage supply, as Greek operators could facilitate lifting Russian crude traded below the price cap. Russia could potentially offer discounts on its crude exports to ensure that there is enough tonnage to retain its exports. (Read more in our US sanctions insights)







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