Shadow on the Water

Due to the Western sanctions imposed on Russian oil exports, Russia resorted to various schemes in order to bypass the restrictions. One such scheme involved the establishment of a so-called shadow fleet, which involved tankers delivering Russian oil in defiance of the sanctions. The ports of numerous European countries serve as destinations for these vessels, prompting discussions among the European states about ways to combat the shadow fleet. However, experts argue that the current efforts to fight against it are ineffective.


Prior to the escalation of the Ukrainian conflict, the Russian merchant fleet consisted of approximately 1,700 vessels, with a total deadweight of about 24 million tons. Among these vessels, 70% were tankers and bulk carriers primarily used for transporting raw materials. However, following the outbreak of hostilities, international companies withdrew from the Russian market, leaving container deliveries primarily in the hands of these companies. Consequently, foreign vessels accounted for 61.5% of the overall tonnage of vessels operating in Russia. This situation prompted Russia to prepare for an expansion of sanctions by working on the creation of its own shadow fleet in 2022.

As a result, there was an increased global demand for tankers and bulk carriers of types LR1, MR, Aframax, and Suezmax, which are well-suited for transporting Russian cargo. Consequently, sales of Suezmax vessels doubled in 2022 compared to the previous year, while sales of Aframax and MR vessels increased by almost a third. Many transactions were conducted by anonymous buyers and investors. The heightened demand, in turn, led to rising tanker prices.

Despite explicit provisions in the purchase and sale agreements, the stipulation that the purchased vessels should not enter sanctioned ports was largely ignored.

To manage the shadow fleet in 2022, approximately 864 new international companies in the maritime sector with ties to Russia were established, as estimated by experts from S&P Global Market Intelligence. Out of these companies, 87 possessed vessels that were previously owned by Russia or sailed under the Russian flag. Subsequently, 880 ships belonging to 777 companies from this list entered Russian ports after December 5. The majority of ship owners are primarily based in Turkey (160 companies), China (120 companies), Greece (110 companies), the UAE (100 companies), Hong Kong (83 companies), and India (40 companies).

Experts assert that in 2022, Russia became the leading country in terms of the number of vessels in the «gray» fleet category. These tankers are operated by specially established companies that conceal the origin and ownership of the cargo, while maintaining a semblance of legality. Russia also entered the top five countries in terms of the number of ships in the "dark" fleet, which are utilized for transporting illegal or sanctioned cargo.

According to estimates from Windward, the «gray» fleet currently transports around 2.6 million barrels of Russian oil per day. As a result, the volume of oil transported by «gray» vessels worldwide has increased by approximately 68% compared to the period leading up to February 24. Similarly, the volume of transportation via the «dark» fleet has risen by 22%.

The primary destinations for Russian ships in the «gray» and «dark» fleet are China and India. However, Russian «gray» vessels also enter the ports of EU countries such as the Netherlands, Italy, Greece, and Belgium. Meanwhile, «dark» ships dock at ports in the Netherlands, Bulgaria, Italy, Germany, Greece, and Belgium.

Companies involved in shadow schemes to aid Russia in circumventing sanctions are frequently identified. For instance, in April 2023, the Indian company Gatik Ship Management had its insurance revoked due to its transportation of Russian oil at prices exceeding the established ceiling of $60. Consequently, Gatik Ship Management underwent reorganization, registered new companies, transferred ships to jurisdictions outside India, and managed to resume its operations.

Source — RE:Russia

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