According to new data from the Financial Times, Russia has significantly increased the capacity of its shadow oil fleet, increasing the volume of oil transportation from 2.4 to 4.1 million barrels per day. This represents an increase of almost 70% for the year, despite the sanctions introduced by Western countries.
The volume of Russian oil transported by poorly maintained and underinsured tankers increased from 2.4 million barrels per day in June 2023 to 4.1 million barrels per day in June 2024, according to a report published by the Kyiv School of Economics (KSE) in Monday.
According to KSE data, by June 2024, 70 percent of Russian offshore oil was carried by the shadow fleet, which Russia is estimated to have spent $10 billion building. This reportedly included 89 percent of Russia's total crude oil supplies, most of which traded above a price ceiling of $60 a barrel from mid-2023, and 38 percent of Russia's oil product exports.
The trend comes as the US, Canada, Japan and European allies increasingly target global insurers and shipowners in an attempt to limit Moscow's ability to generate profits for its war in Ukraine. They also added to the sanctions list companies and individual vessels associated with the Russian shadow fleet, the publication notes.
"Tanker sanctions have been quite effective, but the listing campaign has been too limited to effectively curb Russia's shadow fleet," said Benjamin Hilgenstock, one of the authors of the KSE report.
He added that sanctions should be used "systematically" to enforce requirements for adequate oil spill insurance and thus "eliminate the serious and urgent environmental threat posed by the shadow fleet."
Many of these vessels are said to regularly operate in busy European waters, including the Baltic Sea, the Danish Straits and the Strait of Gibraltar, increasing the risk of environmental disasters for the EU and neighboring countries.
KSE proposes to create "shadow-free" zones in European waters to reduce these risks. Otherwise, the catastrophe is simply "waiting for its time on Europe's doorstep," the report states. "The weak link in the regulatory framework, together with the dramatically expanded role of shadow tankers in the Russian oil trade, means that a large-scale environmental disaster is only a matter of time," the report reads.
The authors of the KSE report say that if problems arise, European states could face clean-up costs reaching billions of euros.
Several accidents involving shadowy vessels linked to Russia have already occurred. In March of this year, the 15-year-old shadow tanker Andromeda Star collided with another vessel near Denmark. The oil was not spilled, as it was on its way to Russia, unloaded.
Four Russian shadow fleet vessels have lost engine power in the past two years, including incidents in the Dardanelles and Denmark Straits.
Shadow fleet vessels carrying oil from other authorized sellers have also experienced engine failures, revealing maintenance issues and explosions. In May 2023, a 27-year-old Gabon-flagged 700,000-barrel vessel used to transport Iranian oil suffered a major explosion off Indonesia. It was empty at the time.
Several Shadow Fleet vessels have been involved in oil spills, some of which have disappeared from the scene, causing environmental damage. In 2019, the 23-year-old Ceres I, previously involved in the Iranian oil trade, collided with another tanker near Singapore, turned off its signal and tried to disappear before being caught by the Malaysian coast guard, the paper said.
