US hit Russia’s ‘shady’ fleet that funds Putin’s war in Ukraine
After the imposition of direct economic sanctions against Russia by the US and Europe, Moscow is looking for alternative ways to finance its war in Ukraine. Russian oil is one of the commodities and financial instruments on which Moscow relies extremely. The money that Russia earns from the sale of this type of energy source is actually the most important item in the Russian budget.
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However, Washington was able to strike precisely at Russian oil, taking action that perhaps it should have done from the beginning. With a risky market tool, the US is blocking access to Russian oil at various ports around the world.
What did the US do? Bloomberg reports, cited by Russian media Gazeta.ru that the Club of American Insurers refused to provide services to the Indian company Gatik Ship Management, which has become the largest carrier of oil from Russia. Thus, the Russian “shady” fleet was dealt a serious blow.
The publication notes that Gatik Ship Management was previously unknown and did not hold a significant stake in the fuel transportation industry. In 2022, however, it has assembled a fleet of 48 tankers capable of carrying more than 30 million barrels of oil. At the same time, it is known that all the company’s ships docked in Russian ports and exported oil and oil products from there.
According to the agency, the American side considers the actions of the Indian company to be a violation of anti-Russian sanctions, in particular the price ceiling. Consequently, Gatik’s insurance services are no longer provided.
It is about “protection and indemnity” insurance, which concerns the coverage of risks in the event of an oil spill. In addition, without this insurance, tankers will not be able to enter certain ports and straits.
In early February, Bloomberg, citing statistics from Trafigura analysts, reported that Russia’s “shady” fleet, transporting oil from this country to various regions of the world, after the European Union [EU] embargo on imports came into force of raw materials from the Russian Federation reached a record high level – up to about 600 tankers. Neither Iran nor Venezuela, which are also subject to international sanctions, can measure up to Moscow on this indicator.
The fact that Russian oil carried by Gatik Ship will no longer be able to pass through straits and dock at certain ports means that Moscow’s income will decrease. This, in turn, will lead to a depreciation of the ruble on international markets.
At the same time, with a low price of the ruble, and a war that is costing Moscow more and more, and against the background of international sanctions affecting Russia’s access to technology, the country’s military-industrial complex is seriously threatened.
There is already evidence that Russia’s military production is in crisis and that it will enter a bigger one. On the one hand, the largest tank plant in Russia, UralVagonZavod, cannot cope with the tank losses that Russia is suffering on the front in Ukraine.
Lack of technology, delays in supplies of raw materials, de-motivation of employees, and several lawsuits for improperly executed civil purchases have an impact on the monthly production of tanks, which have been reduced to 20 units. Not enough against the background of the average loss of between 100 and 150 tanks in Ukraine.
At the same time, Russia is having trouble negotiating with its long-standing partners. India, for example, is facing a shortage of spare parts for its MiG-29 and Su-30MKI. The Indian government is already considering an option to burden local civil proceedings by agreeing with Russia to conduct them under a Russian license. This means that Russia is also losing revenue from one of its biggest customers, as it will be forced not to sell spare parts to it, but to allow their production in India.
All these indicators, together with the US strike on Russia’s shadow fleet, bring very big losses. Experts suggest that the effect on Russian military production will be felt much faster than the sanctions that have been imposed so far, and in many cases have backfired.
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