A ‘shadow fleet,’ or ‘dark fleet,’ has continued transporting Russian oil despite sanctions, explains the World Economic Forum (WEF) in a recent article. The oil revenue it provides helps fund Russia’s military aggression. Building broader consensus on enforcing sanctions could curtail this non-Western-aligned supply chain.
In December, the European Union banned imports of Russian crude oil by sea, and the EU and other major economies imposed a price cap, designed to keep essential exports flowing from one of the world’s biggest oil producers while still penalizing it.
Another embargo and a cap on refined oil products followed, nearly a year into an onslaught believed to have so far resulted in hundreds of thousands of military casualties and some 30,000 civilian deaths.
The sanctions mean that even if a delivery of Russian crude is headed somewhere without an embargo, many insurers can’t cover its transport if it’s being sold above a price cap. But there’s another option, John Letzing, Digital Editor, Strategic Intelligence, World Economic Forum, notes.
He further explains that a non-Western-aligned shadow fleet (or “dark fleet”) is largely made up of ageing ships that maintain a low profile by sailing without insurance, turning off transmitters, falsifying documents, or simply painting over a name. Decades-old vessels are now being sold at record prices, and furtively joining its ranks.
Ben Luckock, an executive at commodities trading firm Trafigura, said recently that this parallel armada has swelled to about 600 ships. Some 400 crude oil vessels, or a fifth of the world’s fleet, has exited mainstream operation “ostensibly to do Russian business,” he said. And 200 smaller product tankers, or 7% of that market, have followed suit.
The freight they’re tasked with sustaining is enormous. In the year prior to its invasion of Ukraine, Russia accounted for about 14% of global crude oil supply – and revenue from both oil and natural gas made up nearly half of its federal budget.
Εxperts say the surreptitious supply chain required to continue transporting Russia’s oil must operate at a far bigger scale. And the stakes may be more readily apparent to anyone who sees the unsettling images regularly streaming out of Ukraine.
Trafigura’s Ben Luckock, said many ships entering the shadow fleet are designed for short-haul business, and will require longer and more costly voyages to reach their final destination. “It is a vast volume that needs to find a new home,” he said.
Plenty of Russian oil will still likely find its way into Europe and the US, even without the services of a shadow fleet.
Still, experts say that more actively targeting Russian oil could stop the killing in Ukraine. As allies seek to limit market opportunities and lessen value, though, Russia has propped up prices by announcing it will cut output. More unified pressure might help break the impasse.
