Russia has built a shadow fleet at an estimated cost of around $10 billion, now transporting approximately 70% of its oil and oil products on these tankers. This fleet allows Russia to largely evade restrictions associated with the $60-per-barrel price ceiling. Western sanctions targeting individual tankers and their owners have proven largely ineffective in curbing Russian exports.
According to a report by the Kyiv School of Economics (KSE), cited by the Financial Times, the shadow fleet nearly doubled its capacity to 4.1 million barrels per day in June this year, up from 2.4 million barrels during the same period last year. This represents an increase of almost 71%. Crude oil is now carried almost entirely (89%) by older tankers, with an average vessel age of 18 years, while 38% of oil products are transported by these aging ships.
Some of these tankers are insured against oil spills by Russian companies, though most are reportedly uninsured. The KSE recommends the creation of “shadow zones” in European waters, restricting access to tankers that cannot prove adequate insurance coverage. However, the report warns that under current conditions, “a major environmental disaster is only a matter of time.”
The Financial Times also notes that four tankers in the shadow fleet have experienced engine failures over the past two years at critical points, such as the Danish Straits and the Dardanelles. So far, these incidents have not resulted in oil spills.
Western countries have begun imposing sanctions on individual tankers, as well as on their owners and operators. Benjamin Hilgenstock, one of the authors of the KSE report, stated that these sanctions have been effective in deterring some ships from continuing their operations. However, he emphasized that the overall impact on weakening Russia’s shadow fleet has been limited.
In contrast, Craig Kennedy, an expert on Russian oil operations at Harvard University, noted that Russian oil companies often prefer foreign ownership and operators to conceal their connections to shadow fleet vessels. This practice complicates efforts to sanction the entities involved. Kennedy estimates that Russian companies have spent over $10 billion acquiring old tankers since 2022, primarily financed through Russian banks.
