Sanctions Busting Seems to be Creating a Thriving Criminal-Esque
Network of Nations: Russian Ghost Tankers, Indian Refiner Profiteers, Enabled Iranian
Military Posturing, and Other Back Room Deals and Workarounds
I realize this
post is only marginally related to energy and more of a geopolitical post, but I
want to talk about it. It will be a post that rambles quite a bit. I will also
be much more liberal and unprofessional in my language for reasons of emphasis.
The Kremlin is talking openly about an alternative to the so-called Western
rules-based order and their foreign minister Sergei Lavrov has been making the
rounds in Africa and elsewhere trying to drum up support for that alternative.
I certainly hope he fails miserably. Who the hell in their right mind would
want to be part of a world where Russian bullshit propaganda is seen as a
viable viewpoint? Russia’s Wagner Group mercenaries, who also take in troops
from Africa or any sympathetic country who has poor men willing to fight for
them, have been accused of rape, torture, murder, and plundering in several
African countries. While they may support some fights against Islamic
extremists, in other conflicts they support the morally inferior groups. They
are active in Syria, Sudan, Libya, Central African Republic, and Mali. Russia
is known to prop up dictators like Assad and indeed it is part of their strategy
to oppose the so-called Western order that abhors authoritarianism and come to
the aid of any country that distrusts the U.S. Lavrov and the Kremlin like to
exploit and bring up past Western colonialism to influence their new African
comrades. The so-called Western order is not strictly Western as several Asian,
African, and Middle Eastern Countries are a part of the order. Many of those
African countries sympathetic to Russia and others remained neutral by
abstaining in votes to condemn Russia’s invasion of Ukraine at the UN. Lavrov has
also been emphasizing enhanced trading with countries like dictatorship Zimbabwe,
which potentially helps them evade sanctions and the effects of sanctions. Russia
has also sought diplomacy in their own region with allies like Kazakhstan,
Uzbekistan, Turkmenistan, and Armenia, although some of those countries like
Kazakhstan are moving away from them a bit. They also retain influence in
former Soviet Republics like Georgia, Serbia, Bosnia, and other Eastern
European countries. They talk about the Ruskey Mir, or the Russian ‘sphere of
influence’ which includes areas they invaded and populated with
Russian-speaking peoples. People like Bernie Sanders have defended their claims
of the Russian sphere of influence as valid and compared them to the Monroe Doctrine
that states that the Western Hemisphere is our own sphere of influence where only
democratic governments should be supported. He argued this in an op-ed just before
the invasion of Ukraine. I think he is dead wrong, and it is an unfair and inequivalent
comparison. In hindsight, the US and the rest of the free world should have
acted more boldly against Russian support of Assad in Syria as they brutally
bombed civilian areas and institutions and flattened cities full of people. The UN reported that they bombed hundreds of
schools and hospitals and also developed a tactic to then bomb those who were
responding to the bombings, the medics and their helpers. Those tactics were
used to kill and intimidate civilians. It was a success for them that
influenced their strategy in Ukraine. War crimes without retribution lead to
more war crimes and the Russian army and mercenaries have no problem at all
with committing war crimes.
In the
economic sphere Russia has joined with Brazil, India, China, and South Africa
in the BRICS alliance. Both India and South Africa have remained too neutral in
the Ukraine conflict and should be strongly criticized for it. Israel too has
remained too neutral citing delicate security agreements with Russia. China was
expected to remain neutral as their authoritarian government needs friendship with
other authoritarians, but they have at least not wholly embraced Russia’s
positions. In fact, many of the world’s problems are directly caused or
exacerbated by Russia’s influence which they leverage anywhere they can. They
rarely follow the rules and they have gotten away with far too much over the
years. The Ruskey Mir is not an old idea. It is a new idea meant to invoke old
claims to some imagined Russian empire of centuries ago, one Soviet imperialism
and brutality helped to rekindle. It is supported by Slavic-centric philosophers
and those who would bring ethnic cleansing and genocide if they knew they could
get away with it.
North Korea is
a regime that is sinister to the core and is of course supporting Russia with
ammunition and likely other things. Their leadership is a cult, a stain on the
world, and a disgrace to the human race. They too have long evaded sanctions,
had some success in cyber warfare, have starved and tortured their own
citizens, and have nuclear capabilities, which is quite scary.
The Europeans allowing
themselves to become overly dependent on Russian gas and oil was a huge
mistake. The over-emphasis on fast decarbonization was a part of that
dependence. Not only gas and oil but fertilizer, petroleum products, metals like
nickel, uranium, uranium processing and enrichment, and many other things were and
still are heavily supplied by Russia. It is the largest country in the world
and is endowed with many natural resources, a well-educated population, and
many technological capabilities. The sanctions have no doubt disrupted the
world economy and everyone is affected by them. However, we see that it is
necessary in order to weaken an immoral regime that has long flouted
international rules and norms. Putin and company are why I don’t drive as much
as I used to drive and why many keep their houses cooler in the winter. However,
there are many companies that have profited handsomely from the sanctions,
albeit inadvertently. The Big Oil majors Exxon Mobil, Chevron, Shell, BP, and
Total have all recorded record profits. While many who work in the industry will
say that is just how the market goes, that is not wholly true. The sanctions
themselves were a manipulation of the market, a manipulation of available supply
and demand. They and other companies, including LNG exporters have profited from
the sanctions. Surely, some of that profit was necessary to help balance the
new realities of the market. However, others like Biden and company think that
turning that excess profit into stock buybacks and not increasing exploration
is not fair. He has a point, although to be sure Biden has not signaled much
long-term support for the oil and gas industry and the industry is rightfully
concerned that they could end up with stranded assets and other barriers like
carbon fees and regulatory hurdles.
Iran has long been sanctioned and has developed
over the years many workarounds to the sanctions. The country, ruled by Islamic
extremists, has long executed large amounts of people. Human rights there are a
joke, and their nuclear and military ambitions are concerning. And yet they are
undeterred in their quest for power. They have obviously formed an alliance
with Russia, providing with them with kamikaze drones to bomb Ukrainian
infrastructure (a war crime in itself), making deals with Russia to receive military
jets, training Russians in using their drones, and more recently helping the
Russians evade sanctions. One of the first things to do in evading sanctions is
to find allies willing to help you evade them. Iran has allies in many places
that do this, regardless of their government’s stances: Turkiye – led by
Erdogan who has been dubbed the ‘two-faced Sultan’ and Venezuela come to mind.
They have continued to sell oil on the black market despite sanctions. They
have helped Venezuela do the same. More recently, Iranian engineers are working
in Venezuela to help revive their oil refineries, which had been so poorly
mismanaged that it will take a lot of time, money, and effort to get them
working again. The whole country is basically a failed state due to corruption,
mismanagement, suspicion of foreign companies, human rights abuses, and
authoritarianism. What started out as a successful Socialist state – Bernie Sanders
once praised Venezuela as an ideal government model, how wrong he was – is now
a backwater that can’t feed or power its people and their chief export, once
oil is now refugees. But they are not the only Socialist Latin American state
with diplomatic ties and which aids sanctions busting for Iran. Cuba has long
been an Iranian ally and in the past so too was Brazil during Lula’s first
regime. Then, he was one of the conveners of the Sao Palo Forum which most of
the leftist Latin American parties are a part, including the Socialistic-led states
of Cuba, Venezuela, Bolivia, Brazil, and Nicaragua. While Lula has tamed his Socialism
a bit in favor of Democracy, he is still certainly not an ideal American ally.
He blames the US and NATO just as much as Russia for the war in Ukraine. He is
allowing Iranian warships with cruise missiles to dock at ports in Brazil,
although he did graciously delay that in order to placate Biden before their
meeting in Washington. My question is why the fuck is anyone in this
hemisphere, assuming they are democratic in principle like us, allowing an evil
and thoroughly authoritarian regime like Iran to gain any influence here? We know
Cuba and Venezuela are not democratic. We also know Nicaragua is led by a
former Communist who turned quasi-democratic for a while then pivoted to being
authoritarian and imprisoning all of his political opponents, although freeing
them and flying them to exile in the US was a positive step. We also know
Panama has long been helping Iran evade sanctions. Brazil is now helping them
to flex their military capabilities by allowing them to dock and retaining
strong diplomatic ties with them. This is BS that must be called out. Its nice
that Biden and Lula agree on the urgency of climate change but being on
friendly terms with an evil regime should not be easily tolerated. In many of
these Latin American Socialist-Leftist governments there is distrust and suspicion
of Big America and their corporations. Countries like Bolivia have been left in
the dust by their distrust of foreign firms mining lithium and other evaporites.
Columbia’s new leftist government just decide that new oil and gas development
will be banned. Chile’s new left-leaning government just blocked a huge copper
mine over climate concerns, even though much of that copper would be used for
clean energy.
Iran is also
very problematic in its own sphere of influence. They have long militarily supported
Hezbollah in Lebanon, which has been rightly designated a terrorist group. They
have militarily supported the brutal Syrian regime. They have long armed the
Houthi rebels in Yemen and in just the last few months shipments of arms on ships
disguised as fishing boats have been intercepted by US and French authorities. They
are probing Israeli drilling platforms with drones and have drone bombed US
military facilities in Iraq and Syria and oil facilities in Saudi Arabia. They
have bombed Kurdish areas in Iraq. And, of course, they are arming the Russians
with drones to bomb Ukraine. They are also imprisoning and executing people
protesting their draconian and extremist religious laws. They have obviously
and repeatedly lied about their pursuit of nuclear weapons. Responding to stories
that the Iranian Revolutionary Guard might be designated a terrorist group by
the EU, they threatened to close the straits of Hormuz, which would essentially
be a military act. The EU did not push back. But the reality is they are a
terrorist group as is their regime. The Russian regime is a terrorist group as
well, obviously, whether they are designated as such or not. They repeatedly terrorize
civilians with bombs. It doesn’t get any more terrorist than that. The evidence
is very strong that Iran is a regime that has no place in the international
community. Thus, I would argue that any country that thinks otherwise,
including Brazil, should be held to account. It was also found that there are
many American parts in the Iranian drones sent to Russia. This is more evidence
of sanctions evasion. Part of sanctioning a country is shunning normal
relations with them. Now, I realize that Brazil is not party to the sanctions on
Russia and Iran, but diplomacy should continue to convince all reasonable
countries to stop these fanatics from achieving their nefarious geopolitical goals.
Russia says that human rights are Satanism, and that Ukrainians are Nazis. Their
crazy TV personalities constantly speak of nuking western countries. They
praise our crazy TV personalities like Tucker Carlson and Tulsi Gabbard who are
obviously pro-Russia. People cannot speak freely in much of the world.
One method of
sanctions evasion on oil trade has been used for many years by Iran and Venezuela
and is now becoming the norm for Russia. That is ships called “ghost tankers”
that disguise their ownership and movements. It’s basically routine criminal
behavior. According to a Trafigura executive as told to Bloomberg: “Russia’s
ghost fleet has expanded to about 400 crude carriers and about 200 oil product
carriers.” That represents about 20% of the world’s oil tankers and 7% of the
world’s oil product tankers. Russia is also facing higher costs to ship their
crude for several reasons. One is that they are using smaller and older tankers
(which also increases the chances of spills and accidents). Another is that
they are often self-insured since Western insurance companies won’t insure them.
More and more transactions are not in US dollars as before. However, they are
losing money by being deprived of the competitive advantages of Western
insurers and markets. The EU bans/price caps on Russian crude and products are
working but much of that crude will still make it to market and frankly the
market needs it to meet demand and keep prices low. Russia has recently
announced a 500,000 Bbl per day cut in production to influence pricing, but it
is not likely to have a long-term effect. The Biden administration called that
weaponizing energy and it is just as the G7 price cuts weaponize energy against
Russia. It’s not really unexpected but its not that big of a cut either.
Russian oil revenue has certainly dropped but has it dropped enough to influence
their military ambitions? Mark Finley, a Rice University oil policy expert,
points out in the Hart Energy article referenced below that the Russian sanctions
were not designed to prevent Russia from selling oil but to decrease their profits
on those sales. In that sense, the sanctions have succeeded. In contrast, the
sanctions on Iranian oil exports were designed to prevent as much Iranian sales
as possible. Those sanctions worked well for the most part, he says, partially
because the US was ramping up shale oil production at the time. We still need
Russian crude on the market to prevent further price escalations. Thus, it is
not the same, but it is having the intended effect in general.
There are
other beneficiaries to the Russian price caps. Indian refiners, private ones
that buy imported oil, not state ones that buy domestic oil, have been profiting
handsomely by buying cheap Russian crude, refining it, and then shipping it to
be sold on the international market. Indian crude exports have been way up
since summer 2022. “We are making refining margins of more than $30 per
barrel by processing Russian oil and earning huge profits through exports of
refined fuel,” said a private Indian refiner. Buyers include Europe and the
U.S. so we are still buying Russian crude, letting the Indians profit rather
than the Russians. It is a trade-off for sure and the Indians should appreciate
it. India’s neutrality on the Ukraine conflict and its diplomatic friendliness
with Russia is also a sore point that should be further addressed. Meanwhile Indian
state-run refiners have been facing losses in part due to price caps on Indian
fuel sold to Indian consumers. One solution has been for the state refiners to
give up market share to the private refiners.
Not only is
India profiting but other countries joining in the refining and shipping
profits include the UAE, China, and Greece. China and India are the refiners
profiting the most, but the UAE and Greece join them in the shipping profits.
Some of the shipping companies are partially owned by Russian companies so a
percentage of those profits is making its way back indirectly into the Russian
economy. It is thought that the shippers are profiting even better than the
refiners. The Russian government is currently considering taxing its oil
companies based on the price of Brent crude rather than their own Urals crude
since Urals is selling at more than $30 per barrel lower than Brent. This would
help increase government revenue. Oil is Russia’s largest source of revenue. Before
the invasion of Ukraine, they had great leverage to manipulate the price of
both oil and natural gas, which they did when able. Now, they must scrounge
around for nefarious means of retaining what profits they can get. There is no
doubt the sanctions are working against them. There is also no doubt the
sanctions have benefited others: Big Oil, LNG exporters, refiners mainly in India
and China, and shippers mainly in the UAE, India, China, Greece, and Russia.
Sure, it’s better that these other entities profit than Russia, but it should
be considered that they are profiting from sanctions due to a war, or as Biden
says – ‘war profiteering.’ It is a fair charge but not one that is likely to
lead to much penalty. Temporary windfall taxes on oil and gas profits have been
implemented in some EU countries and in the UK. I have heard some of my
colleagues in the oil and gas industry complain that this is market
manipulation but so are the sanctions from which they have profited. Biden’s
threat to quadruple the tax on stock buybacks is one possible American
pushback. This is not simply the free market at work. Companies are benefitting
at the expense of Russia, a good thing. But they are also benefiting at the
expense of consumers, not a good thing.
Recent reports
by investigative journalist Seymour Hersh that Biden and the U.S. planted
explosives to bomb the Nord Stream pipeline should be doubted. I’m not saying
it’s impossible, but I think it is quite unlikely. I doubt Biden would want to
be directly responsible for one of the largest single methane releases in
history. His environmentalist advisors would be horrified. People like Tucker
Carlson first planted the idea not long after it happened. Hersh’s
investigative reporting has always involved uncovered U.S. intelligence deceits.
His claims that the narrative of the killing of bin Laden was wrong have never been
substantiated. For me, his claims that the UN’s conclusions that Syria had used
chemical weapons was a lie concocted by Syrian rebels that the UN adopted is
very wrong. The UN was satisfied with the evidence. I remember at the time when
commentators on RT America, which a former social media friend of mine used to
post, were saying that the UN was lying. At the time, I was thinking, this is
bullshit, and why is Russia Today spouting all this anti-American nonsense to
American audiences? I was quite glad
when they got banned here after the Ukrainian invasion. However, Russian
propaganda still has considerable reach around the world, in socialist countries
like Vietnam and Laos, in India and China, in former Soviet republics, and
breakaway regions of Russians, or anywhere Russian language is spoken. It is a
world of misinformation, disinformation, conspiracy theories and most of all, lies.
Zelenskyy is correct that the war in Ukraine is a case of the free world
standing up to the unfree invader and that we can’t tolerate it at all. If
Russia succeeds, they will go for Moldova and even Poland, as truly sinister Chechen
leader Ramzan Kadrov says.
I was pissed
off when I heard that Starlink was stopping the Ukrainian army from using its
services, with arrogant loudmouth billionaire Elon Musk wanting to remain
neutral. No doubt he has helped the Ukrainians and they are no doubt grateful.
He is an American citizen and so he should support bipartisan American policy,
or be compelled to do so, by helping Ukraine and not Russia by directly
hindering Ukraine. He has far too much money and far too much power and
influence. If he wants to help the world, he should serve food to the poor or
pick up trash or somehow gain some humility. He should also pay more taxes. As
a self-employed contractor who has been struggling the last few years, I pay a much
higher percentage of my income in taxes than he does and I am well into the
lowest tax bracket, so fuck him and all the other billionaires. America now has
over 1000 billionaires. Make them pay their fair share! And wtf is Roger Waters
doing sticking up for Putin at the UN? Is he the new Steven Seagal? Although I
have enjoyed his music and lyrics over the years, the man has some serious
issues with politics and reality. His anti-Israel pro-Palestinian rhetoric was always
horrible. It is quite sad to see.
That whole
series of arguments by the so-called realists and socialists who say that NATO
expansionism is the cause of Russian aggression are without merit. Nobody has
ever attacked Russia and that has never been a real threat or consideration. They
are thoroughly full of shit. NATO is clearly a defensive organization and there
are obvious very real reasons that they need to be able to defend against Russia
since it is the only country in the vicinity that has invaded other countries, they
have done so many times, and they have meddled extensively in those countries
and used any leverage they can to push their aims. Putin lies directly to the
faces of several European leaders. He is never to be trusted and will never be genuine
in any peace negotiations. His villainy runs deep. The world would be a better
place without him and his Kremlin comrades.
References:
Western
forces are raiding gunrunners at sea and throwing wrenches into Iran's plans.
J. Epstein. Business Insider, Feb. 9, 2023. Western
forces are raiding gunrunners at sea and throwing wrenches into Iran's plans
(msn.com)
Russian
‘Ghost Tankers’ Stalk Global Oil Markets. Joseph Markman. Hart Energy. February
9, 2023. Russian
‘Ghost Tankers’ Stalk Global Oil Markets | Hart Energy
Indian
private refiners profit from cheap Russian crude as state refiners suffer. Deccan
Herald. June 1, 2022. Indian
private refiners profit from cheap Russian crude as state refiners suffer |
Deccan Herald
Oil
Shippers Rake In Billions From Russian Oil Trade. Tsvetana Paraskova.
OilPrice.com. February 9, 2023. Oil
Shippers Rake In Billions From Russian Oil Trade | OilPrice.com
No comments:
Post a Comment