Assessing Russia's Shadow Fleet: Formation, Global Connections, and Future Prospects

Key Chapter Title List

1. Introduction
2. The Transformation of Russian Oil Trade
3. Problem Statement: The Challenge of the Shadow Fleet
4. Research Methodology
5. Analysis Results
6. The Formation Path of Russia's Shadow Fleet
7. The Current Structure of Russia's Shadow Fleet
8. Comparison of Russian and Non-Russian Shadow Fleets
9. Demand Estimation for Russia's Shadow Fleet
10. Expansion Potential of Russia's Shadow Fleet
11. Russia's Countermeasures Against U.S. Vessel Sanctions
12. Policy Recommendations

Document Introduction

Following Russia's full-scale invasion of Ukraine in February 2022, the European Union, as its primary trading partner, suspended most seaborne imports of Russian crude oil and petroleum products. The G7/EU subsequently introduced a price cap mechanism aimed at limiting Russia's oil export revenue while maintaining global energy supply stability. To circumvent these sanctions, Russia accelerated the formation of a "shadow fleet," which has become a core means for it to sustain its oil export volume and revenue.

This research focuses on six core issues: the initial formation and vessel sources of the shadow fleet, its current scale and operational status, its position within the global shadow oil trade, its independent demand separate from compliant vessels, its capacity to withstand vessel sanctions, and its future expansion prospects. Through systematic analysis of relevant data from 2021-2024, it provides targeted policy recommendations for curbing the shadow fleet.

The study utilizes multi-source data including Kpler platform data, vessel owner and insurance information, combined with analytical methods such as TensorFlow Decision Forests. It defines the shadow fleet as vessels not owned or managed by G7/EU entities and not insured for pollution liability with the International Group (IG) of P&I Clubs. This definition aligns with the core characteristics of sanctions evasion and highlights its unique environmental and operational risks.

Key findings reveal that as of Q1 2024, Russia's shadow fleet comprises 435 vessels, with 185 transporting crude oil and 250 transporting petroleum products. This fleet can cover approximately 60% of crude oil export and 45% of petroleum product export transportation needs. The fleet was primarily assembled through three main channels: transfer of management for vessels owned by Russian companies, acquisition of vessels over 15 years old from mainstream fleets, and absorption of vessels over 20 years old destined for scrapping. Its intersection with non-Russian shadow fleets, such as those of Iran and Venezuela, is limited.

The expansion of the shadow fleet not only undermines the effectiveness of international energy sanctions, leading to a narrowing price differential between Russian oil and Brent crude, but also poses significant environmental risks due to vessel age and inadequate insurance, with particularly acute risks in areas like the Baltic and North Seas. Furthermore, operations such as ship-to-ship (STS) transfers and Automatic Identification System (AIS) spoofing further exacerbate sanctions evasion and environmental hazards.

Finally, the report proposes policy recommendations from two perspectives: controlling the existing fleet and limiting future expansion. These include expanding the vessel sanctions list, strengthening controls on insurance and spare parts, strictly enforcing pollution insurance requirements, enhancing investigations and penalties for violations, and broadening restrictions on vessel sales. These recommendations aim to provide decision-making references for maintaining sanction effectiveness and global marine environmental security.