Russia relied on 558 Russian “shadow” vessels to transport 61% of its total seaborne oil exports, valued at €83bn in the third year of the invasion, according to Centre for Research on Energy and Clean Air (CREA). The question now that arises is what will happen to the sanctioned tankers if there is a negotiated cease fire or peace treaty between Russia and Ukraine over the course of the next 12-18 months. However, the world saw first-hand last week how negotiations between the US and Ukraine are unfolding: they are difficult, emotional and tense, especially after the heated engagement between the US president Donald Trump and the Ukrainian president Volodymyr Zelenskyy in front of the news media.
The argument led to the rest of Zelenskyy’s White House visit being cancelled and called into question how much the U.S. will still support Ukraine in its defense against Russia’s 2022 full-scale invasion.
During Zelenskyy’s visit to the United States last week, the US president told his Ukrainian counterpart to be “thankful” and that “he disrespected the United States of America in its cherished Oval Office.”
CREAʼs analysis found that in the third year of the invasion, Russia relied on 558 Russian “shadow” vessels to transport 167 mn tonnes, or 61%, of its total seaborne oil exports, valued at €83bn.
The fleet handled 78% of Russian seaborne crude oil shipments, worth €57bn, and 37% of refined oil products, valued at €26bn.
Russiaʼs strategic investment in “shadow” tankers has undermined the effectiveness of the price cap mechanism, diminishing the leverage of G7+ countries in restricting its oil revenues.
“Shadow” tankers pose a growing threat not only to sanctions efficacy but also to the environmental security of coastal states. Russia has acquired aging vessels, stripped of Western insurance, and registered in non-sanctioning countries to circumvent restrictions.
According to CREAʼs analysis there has been a sharp decline in shipments on the targeted Russian “shadow” tankers immediately following the sanctions from the EU and UK, and after the wind-down period of 60 days from the US.
The US measures were the most stringent, slashing the delivered volume of crude oil by 86% and refined products by 97%.
The EUʼs sanctions also had a significant impact, reducing crude deliveries by 76% and oil product shipments by 57%.
Similarly, UK measures slashed crude deliveries by 34% and effectively eliminated oil product exports, which fell by 97%.
CREAʼs analysis highlights how ship-to-ship (STS) transfers involving “shadow” tankers are critical for Russian oil to reach non-sanctioning countries and circumvent Western restrictions.
In the third year of the invasion, 23% of the oil transshipped in EU waters was destined for China, 11% for India, 10% for South Korea, and 2% for Turkey, with the remainder distributed among other markets.
Despite a range of sanctions on Russian LNG, EU member states imported €7bn of the commodity in the third year of the invasion, in accordance with the analysis. While the value of the imports saw a modest 2% year-on-year increase, volumes went up by 9%.
France led the way, increasing imports by 46% to 7.7 bcm, while Spain saw a 12% decline to 5.7 bcm. Belgiumʼs imports dropped by 21% to 5.1 bcm, while the Netherlands recorded an 81% surge, reaching 1.7 bcm.
“G7+ countries should require maritime insurers to verify, via bank statements, that oil prices paid are below the cap to combat certification fraud and prevent Russia from inflating export earnings,” the report highlights.
The question of what would happen with the “shadow fleet” if the war in the Ukraine ends was discussed recently by broker Poten & Partners.
The broker said in its weekly tanker opinion that the average age of the sanctioned fleet is high. “About 60% of the sanctioned fleet is 20 years old or older and will likely be recycled when sanctions are lifted, and the mainstream tanker fleet is allowed to trade to Russia, Iran and Venezuela again,” the broker explained.
The impact on the tanker market will generally be positive, Poten & Partners said, in particular if the older vessels are quickly recycled and the trade flows do not immediately revert back to pre-war patterns. “In that case, ton-mile demand remains elevated, and tonnage supply is restricted. However, even if trade patterns return to “normal”, the removal of a large portion of the dark fleet will boost the market.”
