Additional Coverage:
- Moscow’s oil exports are under pressure as Western sanctions hit Russia’s ‘shadow fleet’ (newsbreak.com)
Russia’s “shadow fleet” of oil tankers is facing increasing pressure from Western sanctions. The US, UK, and EU have targeted these often older, uninsured ships used to bypass restrictions on Russian energy exports.
Several countries are now delisting these sanctioned tankers, removing their legal right to operate and hindering access to ports and insurance. This leaves the estimated 1,300-ship fleet with dwindling options.
Sanctions have forced the fleet to employ tactics like disabling tracking systems, falsifying locations, and transferring oil between ships. Now, they face the added challenge of finding countries willing to register their vessels.
This has led to “flag hopping,” where ships frequently change their registered country. Popular destinations for these changes have included Panama, Liberia, the Marshall Islands, and Malta.
Experts note that while this is a constant battle, the sanctions are impacting the shadow fleet’s operations. Buyers, banks, and port authorities are hesitant to interact with sanctioned tankers for fear of repercussions.
The financial implications for Russia could be significant. Oil and gas revenues are crucial for the Kremlin, contributing about 30% of the federal budget in 2024.
Recent data suggests that Western sanctions are already taking a toll. Russian oil export revenues reportedly declined by $1.1 billion in November. Shipping costs have also surged, reportedly leading China and India to temporarily halt Russian oil purchases.
While Russia may find short-term workarounds, analysts believe expanding the list of sanctioned ships is essential to further constricting its oil revenue. Targeting third-party intermediaries and fraudulent registries that facilitate Russian oil imports is also recommended. The goal is to continually disrupt and weaken the shadow fleet’s ability to operate.