Yahoo Finance Russian oil exporters are scrambling to buy special ships to sail around Europe once EU sanctions kick in this winter
Purchases of secondhand ice-class tankers rose to $1 billion in May to August, Bloomberg reported.
The increased demand is likely from Russian oil exporters, who will need long-distance ships to sail past Europe when sanctions kick in.
Europe is also expected to increase its demand for longer-distance ships as it seeks alternative supplies.
Russian oil exporters are scrambling to buy special tankers to sail around Europe once EU sanctions fully take effect this winter, Bloomberg reported.
Purchases of secondhand ice-class tankers rose to $1 billion in May to August of this year, according to data from the London-based shipbroker EA Gibson. That's around five times what was spent on secondhand ice-class ships last year, which was largely attributed to oil buyers from China and the United Arab Emirates.
Ice-class tankers are built for long-distance trips, which Russian oil exporters would need to take shipments past Europe to other terminals overseas.
Richard Matthews, EA Gibson's head of research, speculated that the increased demand was likely driven by companies who intend to export Russian oil after EU sanctions take effect, and are stocking up on ships that have the capacity to sail around Europe.
Increased competition and a shortage of the long-distance tankers not only results in higher prices, but more ship-to-ship transfers of oil cargo. That's a tactic already seen among Russian oil exporters, possibly to avoid western sanctions. A report from Nikkei Asia found 41 ship-to-ship transfers of Russian oil this year that eventually made way to Europe, compared to just one ship-to-ship transfer of Russian oil last year.
Europe is also expected to increase its demand for longer-distance ships, although for oil product tankers, which is in a different fleet. The continent has been ramping up purchases of Russian oil ahead of winter to build up energy stockpiles, but will need to find alternative supplies once sanctions kick in. That will hike demand for longer-distance ships to bring in oil from companies in India and Saudi Arabia, which is likely result in higher charter rates for European buyers as well.
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