Look Ahead, Constantly! – World Bunkering – Q1 2024

Steve Simms emphasizes the importance for bunker traders and suppliers to "look ahead constantly" due to rapidly changing sanctions laws, particularly around Venezuelan, Russian, Iranian, and North Korean oil products. 

Venezuelan Sanctions: U.S. sanctions on Venezuelan petroleum are set to resume in April 2024 unless there is progress on Venezuela’s elections, forcing traders to reconsider their bunker sources.

Russian Oil Price Cap: The U.S., EU, and UK continue to enforce a price cap on Russian oil. The focus is on preventing the transport of oil above the cap, with warnings about illicit activities such as falsified documentation and flagging changes. Currently, sanctions on Russian oil don’t apply to bunkering services unless the oil is priced above the cap.

Risk of Future Sanctions on Bunkering: While there are no direct sanctions yet on bunkering for Russian or Venezuelan oil, this could change. If sanctions are extended to restrict bunkering services, bunker suppliers would need proof that oil is priced correctly and from non-sanctioned sources.

Financial and Reputational Risks: There are significant financial risks from extending credit to sanctioned entities, which could result in non-payment, and the reputational damage that could arise from association with sanctioned parties. Additionally, there are concerns about insurance coverage for bunkering activities linked to sanctioned entities.

Compliance Challenges: Traders must improve their “Know Your Customer” (KYC) practices to combat fraud, including spoofed emails and fake documents. Direct communication and verification of clients and transactions are recommended to mitigate risks.

Looking Ahead: As sanctions evolve, bunker traders and suppliers must stay informed, comply with regulations, and be prepared for stricter enforcement. Those who are proactive in understanding and adapting to these changes will reduce legal and financial risks, maintain their reputation, and ensure business continuity.

In essence, bunker traders and suppliers must remain vigilant, adaptive, and compliant as sanctions laws continue to shift and evolve.

Read the full article and details of considerations here: Look Ahead, Constantly!  – World Bunkering | Q1 2024