Russian oil still reaches buyers around the world. But even those who spend days tracking her movement across the oceans, it is difficult to determine who exactly is transporting her. He talks about it CNN.
As Western sanctions against Russia tighten in connection with its invasion of Ukraine, new vessels are joining the existing fleet of mysterious tankers ready to facilitate the export of Russian oil.
Industry insiders estimate the size of this "shadow" fleet at approximately 600 vessels, which is about 10% of the world's large tanker fleet. And the numbers continue to grow.
Who owns and operates many of these vessels remains a mystery. As trade in Russian oil has become more difficult over the past year, many Western shippers have withdrawn their services. In their place came new, little-known players, in some cases with shell companies in Dubai or Hong Kong. Some bought ships from Europeans, others used old, creaky ships that would otherwise end up in the landfill.
"You've delved into the dark arts," one oil-trading company executive told CNN of the hidden network.
The importance of this low-profile fleet has grown as Moscow tries to avoid doing business with Western shippers and customers in China and India crowd out customers in Europe, which are now banned from buying Russian oil and oil products such as diesel.
Shipping to more distant buyers requires additional vessels and shipowners willing to deal with additional complexities and legal risks, especially after the G7 countries imposed price caps on Russian oil.
The expansion of the shadow fleet underscores the dramatic changes that the war in Russia has brought to the global oil market. In a bid to stay afloat, the world's second-largest oil exporter has upended decades-old trading patterns and split the global energy system in two.
"There's a fleet that doesn't do Russian business, and there's a fleet that does almost exclusively Russian business," said Richard Matthews, head of research at EA Gibson, an international shipbroker.
According to him, only a few courts deal with "little by little both."
"Grey ships" and "dark ships"
While Europe weaned itself from Russian energy carriers, buyers in Asia were making deals. According to the International Energy Agency, China increased its imports of Russian oil to an average of 1,9 million barrels per day in 2022, up 19% from 2021. India increased purchases even more, by 800% to 900 barrels per day.
According to the analytical company Kpler, exports of Russian oil to China and India in January reached a record high level after the European ban on sea supplies of Russian oil came into force. Exports to Turkey, another major consumer, also continued to grow (the ban on petroleum products only took effect in February).
These orders require vessels capable of making the trip. The Russian national fleet does not have a sufficient number of ships at its disposal. This is where the "shadow fleet" comes to the rescue.
Matthew Wright, senior shipping analyst at Kpler, sorts vessels carrying Russian oil into two categories: "grey vessels" and "dark vessels."
The "grey vessels" were sold after the invasion, mostly by owners in Europe to firms in the Middle East and Asia that had not previously been active in the tanker market. And the "dark vessels", on the other hand, are veterans of Iran and Venezuela's campaigns to circumvent Western sanctions, which have recently switched to transporting Russian oil.
"Often there is some evidence that they are masking their activities by turning off the AIS transponder," Wright said of "dark" vessels, referring to technology that helps identify and locate vessels.
While Western countries have banned most Russian oil imports, there are no restrictions preventing Western vessels from delivering oil to buyers such as China and India, or providing services such as insurance, as long as G7 price caps are met.
According to Kpler, in January vessels with European owners accounted for 36% of Russian oil trade.
But the legal and reputational risks associated with non-compliance with ceiling prices are very large. At the same time, Russia seeks to stop cooperation with Western shippers. This led to the formation of a new cohort, the composition of which is more unclear, and the history is more complicated.
"We all expected that the dark fleet that carries Venezuelan and Iranian oil around the world would grow, and it has," said Janiv Shah, senior analyst at consultancy Rystad Energy.
One reason is that sending Russian oil to China or India is less efficient than shipping it to neighboring countries such as Finland. According to EA Gibson, Russia now needs four times more oil transportation capacity than it did before the invasion.
As a result, according to the estimates of another top manager of an oil trading company, 25 to 35 ships are added to the shadow fleet per month. Non-profit organization Global Witness estimates that a quarter of oil tanker sales between the end of February 2022 and January this year were to unknown buyers, roughly double the number from the previous year.
Demand could rise in the coming months if China needs more fuel to revive its economy.
Issues and risks
If a larger percentage of the world fleet is used for the transportation of Russian oil and oil products, this eats up capacity, increasing the costs of all oil traders.
"There is a massive increase in inefficiencies in the tanker market," says Kpler's Wright.
There are also questions about who ultimately controls the shadow fleet. According to Serhii Vakulenko, a former head of a Russian oil company and now a research fellow at the Carnegie Endowment for the International World, some shell companies have ties to "the Russian state or certain politically connected players."
Last weekend, the European Union imposed sanctions on Sun Ship Management, a subsidiary of Sovcomflot, Russia's largest shipping company. The EU said the Dubai-based firm, registered ten years ago, "operated as one of the key companies in the management and operation of the maritime transport of Russian oil" and that "the Russian Federation is the ultimate beneficiary" of its business operations.
Moreover, experts said the shadow fleet could weaken Russia's ability to circumvent sanctions or sell its oil above the ceiling price. It also makes it difficult to accurately estimate how much Russian barrels are selling for.
Experts, including Vakulenko, found evidence in customs documents that Urals oil, which is the benchmark for the country, is sold in major ports for much more than the official prices.
Security is also a concern. The "dark" fleet is believed to have a large number of vessels over 15 years old, the period after which major oil companies usually write them off due to wear and tear. Nowadays, more and more such ships make flights all over the world.
"You've got all these older vessels that are probably not being maintained to the best of their ability," says EA Gibson's Matthews. "The probability of a major oil spill or accident increases every day as the fleet grows."
