UK sanctions more Russian shadow fleet vessels — but they won't stop Moscow’s oil trade, says economist

Cover photo: FSRU “Marshal Vasilevskiy”

The UK expanded its sanctions on Russia’s “shadow fleet” on Oct. 17, with the latest package targeting 18 crude oil tankers, three LNG tankers, the gas company Rusgazdobycha, and Russia's only floating storage and regasification unit (FSRU), “Marshal Vasilevskiy.”

The measures have added to the mounting regulatory restrictions on vessels transporting Russian oil sold above a price cap of $60 a barrel. In late 2022, an international coalition made up of the G7 countries, the European Union, and Australia imposed the cap in an effort to limit Moscow’s hydrocarbons income amid its ongoing invasion of Ukraine.

“The UK is leading the charge against Putin’s desperate and dangerous attempts to cling on to his energy revenues, with his shadow fleet placing coastlines across Europe and the world in jeopardy,” said UK Foreign Secretary David Lammy. “I have made it my personal mission to constrain the Kremlin, closing the net around Putin and his mafia state using every tool at my disposal.”

Effectiveness of sanctions remains uncertain

According to the British authorities, the sanctioned vessels helped Russia earn $4.9 billion from crude oil sales in the past year. However, economist Vladislav Inozemtsev told The Insider that these sanctions are unlikely to be notably effective, meaning Moscow will continue lining its coffers with proceeds from the oil trade — and financing its ongoing invasion of Ukraine.

“With this latest expansion, around 60 vessels are now under sanctions, out of several hundred. Some estimate the 'shadow fleet' to include around 1,000 tankers, which may be an overestimation, but it’s clear there are hundreds. Of these, only a few dozen are actually under sanctions. However, this does deter consumers. Naturally, many ports — particularly in Europe and the U.S. — refuse to accept these ships. Occasionally, even ports in India and China decline to receive them as well.

The exact mechanism [of the sanctions] is still unclear, as there haven’t been any cases where an entire port operator was sanctioned for accepting and unloading a sanctioned vessel. Western countries haven’t yet decided to blacklist ports like Mumbai or Shanghai, where these ships dock. Once sanctioned, these ships may be out of circulation for a while, but soon enough, some additional agreements are likely made, and they resume operations.

During these periods of inactivity, they transport oil to certain points in the ocean, where a crude and environmentally hazardous transfer takes place — moving oil from one tanker to another in open waters. From there, unsanctioned ships carry it to ports in India, China, Thailand, and elsewhere. So, for now, I wouldn't say that the sanctions against these ships have had any significant impact on Russian oil shipments.

The reason few ships are added to the sanctions lists is that these measures are mostly semi-legal — there is no strong basis for them to be blacklisted. These are simply ships bought and operated by Russia, which can purchase vessels on the secondary market, load them with oil, and transport them wherever it wants to. These ships are typically old and frequently fail to meet environmental standards. They are generally outdated tankers, but maritime law does not prohibit their operation. In most cases, Western countries only impose sanctions if they find a legal transgression of some sort to latch on to.

Typically, the basis for these sanctions is some form of violation, such as issues with reinsurance, maritime registries, or other connections between the vessel and Western jurisdictions. Many of these ships previously sailed under the flags of offshore maritime nations. As a result, when they were purchased or re-registered, the process was often not entirely transparent or properly handled.”

Foreign firms help Russia bypass sanctions — and the price cap

Part of Russia’s “shadow fleet” is managed by foreign firms that make up a network of front companies stretching from Dubai to China. This method is also used to transport gas from Russia’s Arctic LNG-2 project, which was placed under sanctions by the U.S. last year.

As reported by Bloomberg on Oct. 18, one such company registered in the UAE recently took control of three LNG tankers. In September, the Dubai-based company Matias Ship Management assumed control of the tankers Velikiy Novgorod, Pskov, and La Perouse, which were previously managed by Russia.

Matias Ship Management’s registered address is a shared office space at Dubai’s Meydan Hotel, which is also home to another company — Nur Global Shipping — suspected of aiding Russia in assembling its “shadow fleet.” The hotel is located in a free trade zone, which has previously been criticized by U.S. officials for its lack of transparency.

Russia's “shadow fleet” tied to multiple oil spills in international waters

According to Inozemtsev, the main concern with the “shadow fleet” is that these vessels are insured by Russian companies or little-known firms. Although they are technically insured, the real issue would emerge in the event of a disaster, as these insurers could refuse to pay compensation. So far, no such incidents have occurred, he noted. However, experts are already sounding the alarm — Russia’s «shadow fleet» is responsible for significant oil spills in the world’s oceans.

The first recorded incident happened off the coast of Scotland in March 2024, when satellite images captured an oil slick, likely from the tanker Innova, which was en route from Russia to India. Politico reported that the slick stretched 23 kilometers into the North Atlantic Ocean — but British authorities reportedly took no action.

The second incident happened in February, when the Marshall Islands-flagged tanker Aruna Gulcay left a 47-kilometer-long oil slick off the coast of Italy. The Italian coast guard did not inspect the vessel. Instead, a spokesperson for the Italian maritime agency said that nearby ships were contacted for information regarding the spill. The Marshall Islands government did not respond to a request for comment, and the vessel quickly changed its name and management.

The vessel was reportedly carrying ballast — seawater that keeps the ship afloat — from the Italian port of Ravenna to Novorossiysk, Russia. On Feb. 18, the release of that water was detected by satellites — this despite the fact that ballast water usually does not show up on satellite images.

The NGO SkyTruth, using satellite data, told Politico that they could clearly link a total of nine oil slicks to Russia’s «shadow fleet» tankers. The NGO’s analysts believe the actual number is higher, saying that the spills they’ve found are “likely an extremely small subset of the real problem,” as tracking these ships is extremely difficult. SkyTruth’s analysis depended on the vessels having their transponders active during the slick — a requirement that ships evading sanctions often disregard.