Since the early days of Russia’s war in Ukraine, Western nations have imposed extensive economic sanctions, aiming to cripple Moscow’s lucrative oil profits. Yet, as Europe rolled out its nineteenth round of penalties, an uncomfortable truth has emerged: Russia has cleverly circumvented these restrictions, not by stopping oil sales, but by creating an enormous, clandestine shipping operation.
This ‘shadow fleet’ consists of dilapidated vessels with often obscure ownership, covertly moving Russian fuel to eager buyers in distant markets. While enabling Russia to bypass price caps and import bans, this expanding illicit network carries significant and potentially long-term repercussions.
One striking consequence is the severe environmental threat posed by these rickety ships, depicted here at an oil refinery in Orsk, Russia. The average age of these vessels is around 20 years, significantly older than the broader oil tanker fleet’s 13-year average. Compounded by a lack of proper insurance, the risk of a catastrophic oil spill or other maritime disaster is alarmingly high.
“Many focus on the easy part – imposing sanctions – but we’ve inadvertently created a larger problem,” notes Ian Ralby, a prominent maritime security expert. “The sanctions don’t put them out of business; they push them out of legitimate business.”
According to S&P Global Market Intelligence, this shadow fleet now comprises an estimated 17% of all active oil tankers globally, with 940 ships identified earlier this year – a 45% increase from the previous year. While some dubious shipping practices existed before Russia’s full-scale invasion in February 2022, they became widespread as the conflict escalated.
By late 2022, Europe’s ban on Russian seaborne oil forced Russia to seek new buyers in India and China. These longer journeys necessitated more ships, and Russia also sought to avoid the G7, EU, and Australia’s price cap, which restricted services for oil sold above $60 a barrel (a cap that has since been lowered by some).
In response, Russian-affiliated ships began operating with minimal or no legitimate insurance, flying flags from various third-party nations, and transmitting false location data to obscure their cargo origins. This elaborate deception provided plausible deniability for oil purchasers.
Beyond environmental catastrophe, there are concerns about these clandestine vessels engaging in underwater sabotage, such as tampering with pipelines or cables, disguised as accidents.
America’s Government Accountability Office recently acknowledged that the shadow fleet has “limited the cap’s efficacy,” ensuring a continued flow of funds into Moscow’s coffers to support its war efforts in Ukraine.
However, proponents argue that despite these imperfections, the sanctions are not a mistake. Ben Harris, a former Biden administration Treasury official involved in designing the price cap, emphasizes that the sanctions impose significant costs on Russia, making shipping to distant markets and maintaining a covert fleet expensive. “Enforcement remains the true challenge,” he stated.
In an ongoing effort to combat this network, countries are stepping up sanctions. The European Union recently blacklisted over 500 shadow-fleet ships, making them pariahs in most ports. The United States, Britain, Canada, and Australia are also targeting these vessels. Yet, Russia persistently replaces blacklisted ships, leading E.U. sanctions envoy David O’Sullivan to liken the situation to a game of “Whac-A-Mole.”
Despite the challenges, Russia must bear the financial burden of acquiring and operating these new vessels. “Everything we have done ends up costing them a lot more,” Mr. O’Sullivan remarks.
However, the solution is far from perfect. Shadow fleet operators bypass blacklisting by offloading cargo at sea or by “flag hopping”—frequently changing ship registrations to conceal their true identities. As Ralby warns, the West’s actions, while well-intentioned, are inadvertently fostering a vast, illegal global economy. Yet, government officials maintain that the alternative – inaction – is simply not an option.