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Since the G7 price cap on Russian crude oil came into force on December 5, ExxonMobil has started asking shipowners to prove that the tankers they hire out to the U.S. supermajor haven’t shipped oil cargoes linked with Russia in any way, according to a clause in contracts Bloomberg has seen.
After the price cap took effect, buyers paying $60 or less per barrel of Russia’s crude will continue to have full access to all EU and G7 insurance and financing services associated with transporting Russian crude to non-EU countries.
Exxon now wants proof that the vessels it hires haven’t shipped oil from Russia or cargoes from a person in Russia or connected with Russia, and it could terminate the vessel charter if the tanker owner fails to provide this proof, according to the clause Bloomberg refers to.
Exxon’s requirement of non-Russia-linked crude doesn’t apply to Kazakhstan’s crude CPC which is being exported from a Russian port terminal on the Black Sea.
Exxon’s new requirement, as well as a similar such requirement from another supermajor, Shell, suggests that tanker owners and operators will have to pick sides and either abide by the Western majors’ clauses and play by the G7 rules, or stick to transporting Russian crude and risk losing access to transporting crude for the biggest Western oil firms.
The price cap could further upend the tanker market and oil flow routes, as Russia is expected to increasingly use a ‘dark fleet’ of tankers to carry its crude to buyers willing to ignore the price cap.
The EU embargo on Russian imports and the price cap on Russian crude oil have already created “a two-tier market” in the tanker industry, executives said before the sanctions came into effect.
Frontline, one of the world’s biggest tanker owners, said last month that during the third quarter “the development of a two-tier market in freight has evolved as certain owners avoid carrying Russian oil due to sanctions risks or self-sanctioning whilst other owners choose to engage.”
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com