Russia’s Sovcomflot Blames Earnings Drop on Western Sanctions

(Reuters) – Russia’s leading tanker group Sovcomflot said on Friday that Western sanctions on Russian oil tankers were limiting its financial performance, as it reported falling revenues and core earnings.

The United States imposed sanctions on Sovcomflot in February, part of Washington’s efforts to reduce Russia’s revenues from oil sales that it can use to finance its war in Ukraine.

Sovcomflot reported a 22.2% year-on-year drop in nine-month revenue to $1.22 billion and said its earnings before interest, tax, depreciation and amortisation slumped 31.5% to $861 million.

The introduction of new sanctions was a limiting factor during the reporting period,” Sovcomflot said in a statement.

The Group of Seven nations and their allies introduced a Russian oil price cap of $60 a barrel, but enforcing it has proved difficult. As a result, tankers, including Sovcomflot ships, have been a particular target for sanctions.

Sovcomflot CEO Igor Tonkovidov said in June that sanctions and changing market conditions may cut the group’s revenues this year. In April, he said sanctions were affecting 8% of tankers involved in shipping Russian oil.

Over 60% of Russia’s seaborne oil exports go to India.

“The company is continuing systematic work to overcome the emerging challenges,” Sovcomflot said.

(Reporting by Gleb Stolyarov; Editing by Alexander Marrow and Jonathan Oatis)