How Russia’s shadow fleet is reshaping oil trade and weakening sanctions

Many vessels fly flags of convenience, submit false location data, or transfer oil at sea to obscure its origin. By doing so, they provide plausible deniability for buyers in India, China, and other markets

When Western nations imposed sanctions and price caps on Russian oil after the Ukraine invasion, the goal was to choke off Moscow’s main source of revenue. Instead, Russia built up what experts call a “shadow fleet” — hundreds of aging oil tankers with opaque ownership, dubious insurance, and disguised routes. This fleet now accounts for 17 percent of all oil tankers worldwide, creating a parallel shipping economy that is hard to regulate, the New York Times reported.

How the ships work

Many vessels fly flags of convenience, submit false location data, or transfer oil at sea to obscure its origin. By doing so, they provide plausible deniability for buyers in India, China, and other markets. Since Europe banned Russian seaborne oil in late 2022, these longer journeys to Asia made additional vessels essential, driving a surge in purchases of old ships. The result is a booming grey market that has blunted the impact of sanctions.

Costs and risks for Russia

Sanctions have still imposed costs. Shipping oil to distant buyers and maintaining a fleet of worn-out tankers is expensive. But the workaround has allowed Russia to keep money flowing into its war chest. US and European reports have concluded that the shadow fleet has limited the price cap’s effectiveness, though they note that Russia’s transport costs are now much higher.

Environmental and security dangers

The average shadow fleet tanker is 20 years old, far above the global average of 13 years. Many operate with little or no insurance, raising the risk of catastrophic oil spills. Greenpeace has warned of “environmental catastrophe” if one of the decrepit ships fails. Security experts also worry that untraceable vessels could carry out sabotage of pipelines or cables under the sea, cloaking attacks as accidents.

Sanctions enforcement challenges

The European Union has blacklisted more than 500 ships linked to the shadow fleet, while the United States, Britain, Canada, and Australia have stepped up enforcement. Ports are increasingly reluctant to handle the tankers, yet Russia keeps adding new vessels. Officials compare the effort to a game of “Whac-A-Mole,” with each sanctioned ship replaced by another under a new flag or registration.

A lasting illicit economy

Analysts warn the shadow fleet may outlive the Ukraine war. By normalizing covert oil shipments, it risks embedding a permanent global system for sanctions evasion. That could empower not only Russia but also countries like Iran, which already face restrictions, to skirt rules with ready buyers in Asia. Maritime experts caution that the West’s efforts to punish Russia may have unintentionally fuelled the growth of a vast illicit shipping industry.