Putin’s Oil Makes a Stop Off Spain en Route to China
Sanctions are making it riskier and pricier for the Kremlin’s crude to get to Asia, but the EU is still a transit hub.
The new world created by Vladimir Putin’s invasion of Ukraine has spawned a new oil trading hub: the town of Ceuta – a tiny Spanish enclave that sticks out of Morocco into the Mediterranean Sea like a thumb.
There, in calm seas away from prying eyes, Russia is swapping oil tankers, a technique that allows it to reduce shipping costs, get around restrictions and smooth logistics for its remaining customers. The result? Russian oil is still flowing into the global market in great quantities, barely down from prewar levels despite US and European Union sanctions. Yes, the Kremlin is having to sell its oil at a discount, but it’s still shipping lots of it.
Until it invaded Ukraine, Russia seldom used the waters near Ceuta as a stopover for its oil. Back then, Moscow shipped crude directly to European refineries with small tankers. But the Kremlin started to use the sea near the Spanish town as a base for ship-to-ship transfers, first sporadically, and now routinely.
The route goes as follows: Russia loads crude into small-sized tankers called Aframaxes at its Baltic Sea export terminals, such as Primorsk and Ust-Luga. The vessels, reinforced to break through Arctic ice during the winter, ferry the crude toward Ceuta. Near the town, the Aframaxes, which carry about 700,000 barrels, wait until a giant so-called very large crude carrier, or VLCC, arrives. The Aframaxes approach the VLCC and transfer the cargo ship-to-ship. Normally, up to three of those operations are needed to load up one VLCC, which can transport at least 2 million barrels. After that, the VLCC begins its journey toward Asia, going around Africa.