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3 Dec, 2022 22:40

Russia forms ‘shadow fleet’ to bypass oil sanctions – FT

The country has allegedly purchased or reallocated more than 100 tanker ships over the last year
Russia forms ‘shadow fleet’ to bypass oil sanctions – FT

Russia has assembled a “shadow fleet” to circumvent Western oil sanctions, the Financial Times claimed on Saturday. According to the outlet, Moscow has “quietly amassed a fleet of over 100 aging tankers.” 

Citing the energy consultancy Rystad, FT reported that Russia has taken control of 103 tankers since the start of the year, either by repurposing ships previously involved in conveying oil cargo to and from Iran or Venezuela or by purchasing tankers outright. 

On Friday, the EU and G7 finally agreed to cap the price of seaborne Russian crude at $60 per barrel. The decision came after weeks of arguments between countries which thought the proposed cap was “too generous,” such as Poland and the Baltic states, and some maritime nations, including Greece, which wanted the ceiling to be set at around $70 per barrel.  

Western companies will be prohibited from insuring or financing vessels carrying Russian crude unless it is sold for under $60 per barrel under the new rules, which Moscow has made clear it does not plan to accept.

The head of VTB Bank, Andrey Kostin, said in October that Russia had to spend “at least 1 trillion rubles [$16.2 billion]” on “the tanker fleet’s expansion.” Western analysts interpreted this statement to mean that Moscow was investing in very large crude carriers (VLCCs, which can hold as many as 2 million barrels of crude each), Suezmax tankers (which carry as many as 1 million barrels each), and Aframax tankers (which hold as many as 700,000 barrels each).

According to FT, international observers have commented that Russia will likely use its ‘shadow fleet’ of aging oil tankers to sell growing volumes of energy to countries like India, China, and Türkiye that are not subject to EU or US sanctions and other trading restrictions. 

On Saturday, Kremlin spokesman Dmitry Peskov said Moscow is not planning to recognize a Western-imposed price cap on Russian seaborne oil exports. He added that the government is currently carrying out a review of the situation.

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