Russia's Expanding Shadow Fleet of Oil Tankers Raises Environmental Concerns
October 14, 2024
Research from the Kyiv School of Economics (KSE) indicates that Russia’s shadow fleet of oil tankers is rapidly expanding, now transporting up to 70% of the country’s seaborne oil despite Western attempts to limit Moscow’s energy revenues amidst its ongoing war in Ukraine. By June 2024, the volume of Russian oil being transported by a network of poorly maintained and underinsured tankers has nearly doubled to 4.1 million barrels a day. This growth highlights the challenges faced by Ukraine’s Western allies in isolating Russia’s economy to compel an end to the conflict.
In December 2022, the UK, alongside G7 countries, Australia, and the EU, implemented a price cap of $60 per barrel aimed at restricting Western firms from transporting, servicing, or brokering Russian crude oil cargoes. This was intended to undermine Russia’s oil trade, which heavily relies on Western-owned and insured tankers. At the time, this price cap was seen as a compromise, as there were concerns that a full embargo could trigger soaring oil prices and a global market shock.
However, Russia quickly adapted to these restrictions by deploying a shadow fleet of older, often unregulated tankers with opaque ownership structures. This strategy has allowed Moscow to continue selling a significant portion of its oil above the price cap, with estimates suggesting that at least $10 billion has been invested in this fleet since early 2022. More than 630 tankers, some over 20 years old, are now involved in transporting not only Russian oil but also Iranian crude, which is also under sanctions.
In response to the growing threat posed by this shadow fleet, Western governments have intensified their efforts to enforce sanctions. Last month, the UK announced sanctions on 10 ships believed to be central to these operations. The KSE has called for stricter measures, warning that the uninsured condition of Russia’s shadow fleet could soon lead to an environmental disaster in European waters. Much of the Russian oil traverses heavily trafficked international routes, including the Baltic Sea and the Strait of Gibraltar. The KSE report warns that while major oil spills have been avoided so far, a significant catastrophe is imminent, with cleanup costs potentially reaching billions.
The Swedish Foreign Minister has expressed concern that Russia seems willing to create “environmental havoc” by operating unseaworthy oil tankers through the Baltic Sea, contravening maritime regulations.
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