Maritime Global Trade Roundup – June 7, 2024 

This may SHOCK you, but sanctioned countries don’t easily give up on their energy export efforts…

This week’s Maritime Global Trade Roundup highlights what Russia is doing to keep its oil exports flowing – to India and in the Mediterranean – and the tricky approach being used by North Korea to export coal. 

Enjoy these easily digestible Maritime AI™ insights! 

Why the Sudden Spike in Russian Oil Exports to India? 

• Russian crude oil imports to India reached a new daily high of 1.96 million barrels per day. This is the highest since July 2023, when imports stood at 2.06 million barrels per day. This puts India as one of the largest importers of Russian crude oil in the world.
• Additionally, Rosnfet, Russia’s largest crude oil producer, reported a 92.8% quarterly increase in its net profit for the first quarter of the year. Rosneft’s crude exports are expected to double this month (June 2024), as the Tuapse refinery was struck by Ukraine.
• The overall, longer-term trend shows a drop in Indian oil exports to Russia, due to increasing pressure from Western allies and regulators, plus attempts to close regulatory loops. Our latest Risk Report  observed a 22% decrease in direct oil exports out of Russia to India, with varying impacts on different global regions. 
• Despite this trend, Windward’s insights show that between February and May 2024, there was a 30% increase in port calls by crude oil tankers that arrived in India following a port call in Russia. For contrast, port calls by crude oil tankers that arrived in India from Saudi Arabia, the world’s largest oil exporter, remained largely similar for the past six months. Data also shows that most vessels arrived in India’s ports of Sikka, Mundra, and Vadinar, located in the Gujarat Region.
• Despite the slight increase, in general, Russian oil imports to India declined due to increased pressure from regulators on India and India-based companies, which have been a main target of sanctions lately.

Port calls in India by crude oil tankers arriving from Russia and Saudi Arabia, January 2022-May 2024.

Additionally, Windward’s Sequence Search capability shows that between February and May 2024, there was a 300% increase in the number of port calls by crude oil tankers that previously engaged in dark activity in Russia or the Black Sea. This can be seen as an anomaly, given that during the same period of time last year, there was a 66% decrease in port calls by crude oil tankers previously conducting a dark activity in Russia or the Black Sea.

Port calls in India by crude oil tankers previously conducting a dark activity in Russia/Black Sea, July 2023-May 2024.

An example of a crude oil tanker possibly engaged in crude oil trade from Russia to India after a dark activity in Russia, followed by a port call in India.

• The Western powers’ original intention following Russia’s invasion of Ukraine was to crackdown on Russia, without undue harm to the global economy. As part of this delicate balancing act, countries such as India and China are able to trade with Russia, mostly without consequence. Still, as mentioned above, India has curbed trade with Russia following informal pressure and its wider geopolitical interests.
  
  Does the recent increase show a change in course that might indicate a new trend? Windward’s Maritime AI™ platform empowers customers to detect trends as they develop, and better understand the flow of Russian crude oil and its destinations.

Russian Oil Exports in the Mediterranean

• Since the Greek navy drill in the Laconian Gulf at the beginning of May 2024, Russian oil ship-to-ship (STS) meetings dropped significantly, but did not stop entirely. Open sources suggest that to avoid the drill, Russian-related vessels found a new location to conduct their STS operations in the Mediterranean – Morocco.
• Insights from Windward’s STS classification capability show that while still relatively low, between March and May 2024 there was a 133% increase in the number of commodity STS meetings conducted in the EEZ of Morocco and Gibraltar by crude oil tankers classified as high/moderate risk related to Russia (or sanctioned vessels related to Russia). The latest increase shows a possible change in operations area most likely caused by the Greek navy drill.
• While Morocco and Gibraltar are not known hubs for STS transfers of Russian crude oil, the recent increase – which corresponds to the decrease in commodity STS meetings related to Russian oil in Greece – might show a shift in locations that is caused by geopolitical events and influence maritime trade. Using Windward’s platform and compliance risk assessment, it is possible to better understand the possible risk of trading sanctioned commodities and the flow of Russian oil in the Mediterranean.

Methods Used by DPRK to Continue The Flow of Coal Shipments 

• “Free on Board” (FOB) is a shipping term that specifies when the responsibility for goods being transported shifts from the seller to the buyer. This term is important because it determines who is responsible for the goods at different points in the supply chain, including ownership, risk, and transportation costs. As a result, FOB terms such as “FOB Origin” and “FOB Destination” help define ownership, risk, and transport costs for buyer and seller.
• Based on research conducted by the UN Security Council’s various panels, FOB is used by sanctioned countries to deliver cargo that is considered sanctioned via the use of a facilitator. This can be a fleet, a single vessel, or even specific ports to receive the cargo from a third party company, and then sell it to sanctioned vessels, or vice versa. Most notably, the UN Panel of Experts on the DPRK pointed out in the past that the DPRK is selling coal by using Chinese ports and shipyards as facilitators who, in turn, sell the coal to a third party.
• Additionally, the UN Panel of Experts on the DPRK suggested that the same method was used to deliver shipments of cargo which violated sanctions against North Korea by using a facilitator port in the East Asian Region, and deliver it via vessels related to North Korea.
• In both cases, the UN Panel of Experts brought use cases that show that cargo is delivered to and from the DPRK via vessels that do not transmit their AIS signal, mostly starting at the EEZ of North Korea itself. Satellite imagery shows that these vessels arrive at ports mostly around the Bohai Sea in China, and include, although are not limited to, the ports of Dalian, Yantai, and Longkou.
• Windward data highlights that between January and May 2024, there was a 205% increase in dark activities conducted by North Korean-flagged cargo vessels, following the trend first discovered by the Panel. May 2024 also marks the largest number of dark activities conducted in the North Korean EEZ since September 2023. It is worth noting that a similar increase was seen in the previous year around May, but in May 2024 the numbers seen are higher and might show a possible escalation in the trend.

Dark activities by North Korean-flagged cargo vessels in the North Korean EEZ, January 2022-May 2024.

• Windward’s data also shows that the majority of dark activities were conducted in the West Korea Bay (connecting North Korea, South Korea, and China’s EEZs) and the North Korean port of Nampo. The Panel noted in the past that the West Korea Bay is considered a hub for STS operations. In addition, the Panel has pointed out that many North Korean vessels conduct their dark activities in the area and then physically disguise their vessels to arrive at the facilitator ports and deliver their cargo.

• FOB holds the potential risk of delivering cargo to sanctioned countries, which in turn is regarded as violation of sanctions that could potentially put companies at risk. Using Windward’s Maritime AI™ platform can show the potential risk and actors involved in such operations.