European Security Risks and Forecasts as of Late 2024 – Early 2025. Russia's Ways of Raising the World Oil Prices

The Monitoring Group of BlackSeaNews
and the Black Sea Institute of Strategic Studies

presents Part 3 of the Report on European security risks and forecasts as of late 2024 – early 2025, based on the monitoring results of the Black Sea Institute of Strategic Studies, Ukraine.

Part 1. European Security Risks and Forecasts as of Late 2024 – Early 2025
Part 2. Ways to Reduce Russia's Revenues from Seaborne Crude Oil and Petroleum Products Export

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The difficulty of restricting Russia's Baltic maritime oil exports will be exacerbated by its geopolitical game to increase world oil prices.

As far as we know, Russia has already begun taking measures to raise global oil prices, as the downward trend is utterly unacceptable for the aggressor state waging the war.

While in August 2024 we did not record any tankers heading east from Russian Baltic ports around Africa, bypassing the Suez Canal and the Red Sea, in September there were already 7 such cases, and in October – 13 ones.

Those coincided with the first world media reports in September on Russia's possible transfer of anti-ship missiles to Houthi extremists for firing at ships in the Red Sea.

For reference: the route to India, Singapore or China around Africa is 12-14 days longer and, accordingly, much more expensive than through the Suez Canal and the Red Sea (For the list of tankers/shipowners that have chosen that route, see Appendix 2).

So, we believe that the Russian aggressors order their Houthi accomplices to carry out a series of powerful attacks on tankers in the Red Sea, carefully timed to create panic on stock exchanges, thus, increasing world oil prices. 

At the same time, Russia leaks information on the upcoming attacks to “friendly” owners of the tankers sailing from its Baltic Sea ports to India, Singapore, and China, which accounts for their growing number of voyages around Africa.

Moreover, Russia has another opportunity to drive up world oil prices. At present, there are two separate streams of crude oil exported from Russia’s Black Sea ports:
(1) Russian crude oil that is subject to EU and G7 embargo — from the ports of Novorossiysk, Taman, Tuapse, and the Kerch Strait transshipment point.
(2) Kazakh crude oil of the Caspian Pipeline Consortium (CPC) that is not subject to any sanctions — from a special terminal in the port of Novorossiysk, from where it gets onto tankers via three special single buoy moorings, which allow tankers to be loaded at a considerable distance from the shore. 

Since the start of the embargo, EU states have replaced Russian crude oil exported from Black Sea ports with Kazakh CPC oil (see Figure 1 and Figure 2). 

Note that EU countries import almost all of Kazakhstan's CPC oil (according to monitoring data, 94.9% of CPC oil was exported to the EU in September 2024).

Obviously, that creates opportunities for Russia to suspend or completely stop the export of Kazakh oil to the EU at any time and for any period under any pretext such as weather conditions, technical malfunctions, requirements of the Russian environmental services, or court decisions. Russia already resorted to such measures in March and July 2022.

According to our monitoring, over the period of the EU embargo on Russian seaborne oil imports, (December 2022-September 2024), the volume of Kazakh CPС oil imported by EU countries from the Black Sea totalled 100 million tons, or an average of 4.5 million tons per month.

The main importers of that oil, and thus the EU states that would be the most vulnerable to the Russian blackmail, are Italy, which imported 45% of CPC oil in September 2024, the Netherlands, Greece, France, and Spain with a share of 10-15% each.

Therefore, measures to limit Russia's maritime oil exports should be implemented gradually and in coordination with partners such as the US and other countries that intend to increase their share of the global energy market.

In view of Russia's ongoing aggressive war against Ukraine and Ukrainian resistance that will show no signs of abating, our recommendation to EU countries would be to get rid of the energy import flows that pass through the war zones. In that regard, Kazakhstan's current intentions to reorient a significant share of its oil to the Baku-Tbilisi-Ceyhan route are timely, even though they will certainly face Russian resistance.

To be continued...

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The publication has been created with the support of the Friedrich Ebert Foundation(FES). The position of the Friedrich Ebert Foundation does not necessarily reflect the opinion of the authors.