The European Union’s import ban on Russia crude has led to much longer voyages for shipments, with journeys now taking an average of 31 days from Baltic ports to India, compared with just seven days from the same terminals to Rotterdam and about half that to Poland. That’s putting more pressure on the dwindling fleet of ships whose owners are willing to haul Russian cargoes. A similar pattern is expected to emerge in Russia’s refined products trade.

The country is increasingly reliant on its own tankers and a so-called “ shadow fleet” of usually older ships owned by small, often unknown companies that have sprung up in recent months. European-owned vessels can still carry Russian crude, as long as it is sold at a price below a $60-a-barrel cap, introduced at the same time as the import ban. The level of that cap is due to be reviewed in March. 

There has also been a resurgence in ship-to-ship transfers of cargoes in the Mediterranean, with loads either being combined onto larger vessels or shifted from ice-class tankers to others in order to free up those ships needed for operations in the Baltic in the winter months.

Tankers hauling Russian crude are becoming more cagey about their final destinations. Vessels carrying more than 41 million barrels of Russian crude, the equivalent of 1.45 million barrels a day of exports, left port showing no clear final destination in the four weeks to Feb. 3.

Eoin Treacy's view

The prospect of buying oil at a discount will ensure there is ample demand for Russian exports of crude. The rewards are more than ample to compensate for the risks. Transfers between ships off the Malaysian coast have been ongoing for more than a year and that is unlikely to change while there is such a wide arbitrage.

The Urals crude oil price continues to hover below $60 which suggests the EU price cap is working. Together with the US government commitment to buy for the strategic reserve below $72.50 on West Texas Intermediate, these are important supports for the market.
The spread doubled over the last size months from $10 to $20 which suggests either ample demand or a shortage for Russian crude.
Meanwhile, the offshore drilling sector is rebounding following several bankruptcies and combinations over the last couple of years. Valaris is the new name for Rowan Companies with 11 drillships, 5 semisubmericble drilling rigs, 36 jackups and 2 deep water units. The share has been trending higher since its relisting.
Noble Corp relisted in 2021 and is currently testing its November peaks.

Diamond Offshore Drilling is also at a new high following its 2022 relisting.
Seadrill has a similar pattern.
Transocean has completed a three-year base formation and continues to extend the breakout.

Weatherford International is somewhat overextended in the short-term but remains in a consistent uptrend.
Helmerich & Payne is testing the region of the 200-day MA but it is significantly lagging the above shares.  

There is no getting around the fact that most of these companies have been through recent bankruptcies so they absolutely need to continue to pick up business and there is continued scope mergers.