Russia Resumes Oil Exports to an Asian Nation: A 600,000-Barrel Deal, Sanction-Free.

In adherence to the Japanese government’s directives, Taiyo Oil, a leading oil refining company, has procured a batch of Russian Sakhalin crude oil to ensure stable output at the LNG plant supplying natural gas to Japan. A spokesperson for Taiyo Oil stated, “Following the request from the Ministry of Economy, Trade, and Industry, we decided to accept 600,000 barrels of Sakhalin Blend crude oil.”

Although Japan halted the import of Russian crude oil in early 2023, they possess a special exemption from the US (expiring on June 28, 2025) to import oil from the Sakhalin-2 project. Specifically, the US Department of Treasury’s Office of Foreign Assets Control (OFAC) has authorized the maritime transport of crude oil originating from the Sakhalin-2 project (a by-product of Sakhalin-2) until 12:01 AM ET on June 28, 2025, on the condition that the by-product is solely imported into Japan.

Earlier this year, the Japanese government requested oil refineries to consider importing Sakhalin Blend crude oil to ensure the smooth operation of the LNG plant and supply LNG to Japan. The crude oil was delivered on an Aframax tanker that has been blacklisted by both the US and the EU. However, as the import of the Sakhalin-2 by-product is exempt from sanctions until June 28, the shipment is permitted and will not incur any consequences for the Japanese refinery. It’s important to note that the EU does not have any secondary sanctions in place that affect entities in third countries dealing with blacklisted tankers.

The Aframax Voyager tanker delivered the Sakhalin Blend crude oil to Japan’s Kikuma port. According to LSEG shipping data, the vessel arrived on June 9 and departed after unloading its cargo.

As the world’s third-largest economy, Japan relies heavily on imports to meet the demands of its large industry, with over 90% of its oil imports originating from the Middle East. The country is served by five major oil ports – Chiba, Yokohama, Yokkaichi, Mizushima, and Osaka.

In a recent development, Russian President Vladimir Putin signed a decree on June 10, extending the ban on oil and oil product exports to countries that imposed price caps on Russian energy. The new deadline for the ban is December 31, 2025, instead of the end of this month as previously stipulated.

This is the latest extension by Russia since the initial decree was issued in February 2023 as a response to the price caps on Russian oil, set by the G7, the European Union (EU), and Australia. According to the current caps, Russian crude oil is limited to $60 per barrel, diesel to $100 per barrel, and fuel oil to $45 per barrel. Western companies are prohibited from providing transportation and insurance services for Russian oil sold above these cap prices.