Even as sanction threats and bad publicity mount, oil has been discretely leaving Russia in tankers headed to “destination unknown,” and European oil traders have been buying it up under the radar. Over the course of April, an average of 1.6 million barrels of oil have left Russia every day, heading to unknown destinations, TankerTrackers.com found.

According to a new report by the Wall Street Journal, the practice is increasing, with more than 11.1 million barrels of oil loaded into tankers without a planned route in April—up from almost zero before the Ukraine war began.

Despite there being no formal sanctions by the EU banning the import of Russian oil, European oil traders have so far self-sanctioned themselves from buying Russian energy, fearing it would be seen as funding the government that has been accused of war crimes. But now, six weeks since Russia first invaded Ukraine, Russia’s cheap oil is proving to be too alluring for Europe oil traders to stay away from.

Where is ‘destination unknown’?

The use of the “destination unknown” label means the oil is being taken to larger ships at sea and mixed in with oil from other destinations, confusing its origin. It’s a long-running practice first used by other sanctioned countries including Iran and Venezuela.

Traders told the Wall Street Journal that the oil, dubbed “the Latvian blend” and “the Turkmenistani blend,” are being offered in the market with the understanding they are mixed with substantial amounts of Russian oil.

The practice of “destination unknown” oil shipping is similar to other spotty practices developed to hide the purchase of Russian oil. Dark activity, or when ships turn off their transponders for several hours, has increased by 600% since the invasion of Ukraine, according to maritime risk management company Windward.

Russian oil’s negative reputation comes with good reason. Oil sales are a crucial part of Russia’s economy, and its ongoing sales of oil and gas are directly contributing to its war in Ukraine, critics say. Russia’s oil and gas revenue last year brought in $119 billion for the Kremlin, helping fund the country’s military expenditures of around $62 billion per year.

The U.S., Canada, the U.K., and Australia have banned Russian oil outright—but the EU, which is far more dependent on Russian energy, importing 27% of its oil from the country, has yet to decide whether to impose its own embargo. 

The EU has, however, committed to slashing Russian gas imports by two-thirds within a year, even as energy prices surge across the bloc. Its 27 member nations are set to release a proposal in mid-May that will outline a plan to cut Russian oil, gas, and coal completely by 2027. 

Oil on offer

As energy prices in Europe soar, Russian crude oil known as Urals is being traded at a $30 discount to Brent, leading some to keep the Russian energy flowing. Barrels of oil headed to Romania, Estonia, Greece, and Bulgaria doubled this month compared to March, and volumes headed to the Netherlands, the biggest European buyer of Russian gas, also rose substantially.

“The European Union fully sanctioning Russian oil would be like saying, ‘Tomorrow you cut your salary by 40% and you need to continue to live as if nothing has happened,” Giovanni Staunovo, a commodity analyst at UBS Group, told the Wall Street Journal.

He added, “In the meantime, there are huge discounts for Russian oil in the market. Some will find this environment very attractive.”