Core of Russia's Shadow Fleet: Identification of Future Tanker Sanction Targets

Key Chapter Title List

1. Executive Summary
2. Research Methodology
3. Russian Crude Oil Shadow Fleet
4. Core Shadow Fleet Identification
5. Tanker Capacity Increase/Decrease Analysis
6. Substitution Effect of Sanctioned Vessels
7. Russian Refined Products Shadow Fleet
8. Appendix: Details of Core Fleet and Sanctioned Vessels

Document Introduction

This report is a follow-up study to the KSE Institute's June 2024 report "Assessing Russia's Shadow Fleet." It focuses on the shadow tanker fleet constructed by Russia to circumvent energy sanctions such as the G7 price cap. The core objective is to provide coalition country governments with a prioritized list of vessels for sanctions, as such sanctions have proven effective in preventing vessels from participating in commercial operations. With frequent accidents involving tankers lacking proper insurance, and increased attention on this issue at international forums such as the EU Political Community Summit, addressing the Russian shadow fleet has become an urgent international agenda item.

The report defines shadow fleet vessels through a rigorous methodology: tankers that have no restricted service relationships (including vessel ownership, management, and insurance) with jurisdictions of the price cap coalition (G7, EU, Australia, etc.), and are not insured for oil pollution liability by the International Group of P&I Clubs (IG). Based on vessel voyage data from six quarters between January 2023 and June 2024, the study defines the "core shadow fleet" as vessels that participated in transportation throughout all quarters. The analysis integrates multiple data sources including Kpler voyage data, Equasis vessel information, and IG insurance status.

Key findings show that between 2023 and the first half of 2024, a total of 307 tankers participated in Russian crude oil transport at least once. Among these, 45 constitute the core crude oil shadow fleet, accounting for 28% of the total deadweight tonnage of the crude oil shadow fleet in the first half of 2024. In the refined products sector, 432 tankers participated, with a core fleet of 41 vessels, accounting for 29% of the total tonnage of the refined products shadow fleet during the same period. Notably, only 8 of these core fleet vessels (6 crude, 2 products) are sanctioned by the US, EU, and UK, leaving a significant number of key vessels unaffected.

In the first half of 2024, Russia's shadow fleet offset capacity losses from sanctions by adding new capacity: crude oil transport added 8.9 million tons of new capacity (including 1.92 million tons of conventional capacity), offsetting 6.05 million tons of sanctioned capacity; refined products added 8.15 million tons of new capacity (including 980,000 tons of conventional capacity), covering 690,000 tons of sanctioned capacity, thereby keeping overall capacity largely stable. This dynamic led to the proportion of Russian crude oil exports transported via the shadow fleet rising to 89% in June 2024, while the proportion for refined products remained stable at 35%-45%, supporting Russia's robust oil export revenues.

The report recommends that to further pressure Russia's ability to finance its war of aggression against Ukraine, coalition countries should prioritize sanctioning 39 unsanctioned core crude oil shadow tankers and 39 unsanctioned core refined products shadow tankers. The withdrawal of these vessels would impose significant sunk costs on Russia, forcing it to rely more on the mainstream fleet constrained by the price cap.