Russia’s shadow fleet of oil tankers is expanding, according to research, transporting up to 70% of the country’s seaborne oil despite western efforts to curb Moscow’s wartime energy revenues.
The volume of Russian oil being transported by poorly maintained and underinsured tankers has almost doubled in a year to 4.1m barrels a day by June, according to a report published on Monday by the Kyiv School of Economics (KSE).
The findings underscore the multiple difficulties faced by Kyiv’s western allies in their efforts to isolate Russia’s economy in an attempt to force Moscow to end its war in Ukraine.
In December 2022, the UK – alongside G7 countries, Australia, and the EU – implemented a price cap of $60 a barrel to restrict western companies from transporting, servicing or brokering Russian crude oil cargoes in order to undermine Russia’s oil trade, which is heavily reliant on western-owned and insured tankers.
The move was viewed at the time as a compromise amid concerns that a full embargo could lead to rocketing oil prices and a global oil price shock.
However, Russia quickly discovered a workaround to the measures by utilising a so-called shadow fleet of older tankers with opaque ownership, enabling it to sell a significant portion of its oil above the price cap.
The KSE paper estimates that Russia has invested at least $10bn (£7.6bn) into the fleet since early 2022. “The strategy has significantly reduced the sanctions regime’s leverage,” the report says.
More than 630 tankers – some more than 20 years old – are involved in shipping Russian oil, as well as Iranian crude that has been subjected to sanctions, according to Lloyd’s List Intelligence, a maritime information service.
Western governments have attempted to clamp down on Russia’s shadow fleet, with the UK last month announcing sanctions on 10 ships that it believes to be at the heart of the operation.
KSE, which calls for tougher sanctions on Russian oil, has also warned that the uninsured Russian shadow fleet could soon cause an environmental catastrophe in European waters. Much of the Russian oil is transported through busy international transport routes, including the Baltic Sea and the strait of Gibraltar.
“Large oil spills have so far been avoided but a major disaster is waiting to happen and cleanup costs would reach billions,” the KSE paper reads.
The Swedish foreign minister previously told the Guardian that Moscow appeared prepared to create “environmental havoc” by sailing unseaworthy oil tankers through the Baltic Sea in breach of maritime rules.
