Russia’s 14 oil tankers stuck in South Korean port due to US sanctions

Russian oil tankers: Several tankers loaded with 10 million barrels of Russia's Sokol grade crude oil are stranded off the coast of South Korea, unsold due to US sanctions and payment issues, as reported by two traders and shipping data. More than a dozen vessels, including 11 Aframax vessels and three very large crude carriers (VLCCs), are currently stuck around South Korea's port of Yosu, representing a significant challenge for Moscow and causing a disruption to Russian oil exports.

The volumes, equivalent to 1.3 million metric tons, account for over a month's production of the Sakhalin-1 project, a former flagship venture of US major Exxon Mobil. Exxon Mobil exited Russia in 2022 after Moscow's invasion of Ukraine, impacting production levels at Sakhalin-1.

Sakhalin-1, initially established under a production sharing agreement, saw a decline in output following Exxon Mobil's departure, and the project has not fully recovered since then. The challenges in selling Sokol grade oil are notable disruptions to Russian oil exports, posing a significant issue for Moscow in the face of Western sanctions.

Last year, the United States imposed sanctions on various vessels and companies involved in transporting Sokol. The stranded vessels near South Korea are facing difficulties in finding buyers due to the impact of these sanctions. Washington has underlined that its sanctions aim to reduce revenues for President Vladimir Putin and the Russian military in Ukraine without disrupting global energy markets.

The stored oil volumes on the stranded tankers represent 45 days of production from Sakhalin-1, which typically produces around 220,000 barrels per day (bpd). Some very large crude carriers (VLCCs), including La Balena, Nireta, and Nellis, are acting as floating storage for the Russian Sokol oil grade.

Payment problems have also led to delays in Sokol oil shipments to the Indian Oil Corp (IOC), forcing India's largest refiner to tap into inventories and purchase additional oil from the Middle East. The disagreement over the currency used for payment is causing further complications in the oil trade between Russia and India. Neither IOC nor Rosneft, the Russian oil major, responded to Reuters requests for comments on the situation.

(With Reuters inputs)