The “shadow fleet” used by Russia, Iran and Venezuela to avoid western sanctions and ship cargo to customers including China and India is “exploding” in its scale and scope, and there are concerns that efforts to counter it are drawing closer to dangerous military confrontations.
Complicating the issue is that Russia has begun putting its own flag on some former shadow fleet tankers, in an open challenge to Europe.
The constellation of ageing oil tankers – under opaque ownership and questionable flagging – has become the focus of rising international attention this year. There have been maritime interdictions to enforce sanctions, and the recently announced US blockade of sanctions-busting ships in Venezuela.
Earlier this month US special forces rappelled from helicopters to board the Skipper, a tanker off Venezuela that the US treasury had placed under sanctions in 2022 amid allegations it had been smuggling oil on behalf of Iran’s Revolutionary Guards and Hezbollah.
On Saturday US forces apprehended a second merchant vessel carrying oil off the coast of Venezuela in international waters, even though it does not appear to be on the list of vessels under US sanctions.
The US seizures follow incidents this year where Estonia and France interdicted vessels suspected of belonging to Russia’s shadow fleet, and recent attacks by Ukrainian air and sea drones on Russian shadow tankers accused of being involved in sanctions evasion.
The increasingly aggressive efforts to police the shadow fleet and evidence that Russia is willing to use military assets to protect tankers, has led experts to warn of the risk of confrontation.
That was dramatically underlined on Friday when Ukraine announced it had struck a Russian tanker with aerial drones in neutral waters off the coast of Libya, after previous similar attacks in the Black Sea.
A source in the Security Service of Ukraine said it was a “new, unprecedented special operation”, Kyiv’s first attack on a Russian tanker in the Mediterranean, carried out 1,200 miles (2,000km) from Ukraine’s borders.
“The shadow fleet itself is not a new threat,” said Gonzalo Saiz Erausquin, a research fellow at the finance and security centre at the Royal United Services Institute. “But [it] has expanded drastically after Russia’s full-scale invasion of Ukraine in 2022. That saw what we call the shadow fleet explode to some 900-1,200 vessels globally.
“It is not highly structured or homogeneous. These are vessels that Russian interests are able to purchase secondhand, opaquely owned tankers or owned by companies prepared to engage in illicit activity.”
The shadow fleet has spawned a whole illicit network to support it, including a recent proliferation of fake flag registration websites, unscrupulous brokers and a cast of opaque companies that will facilitate the trade.
The tanker Boracay, which was interdicted by Estonia and France earlier this year, is a case in point.
It was acquired in 2020 by a so-called brass plate company – meaning one that exists in name only – in Seychelles called Baaj Shipping. It was blacklisted by both the UK and EU for its suspected links to transporting Russian oil products, “irregular and high-risk shipping practices” and allegations of operating under a fraudulent Benin flag listing, following several other false flag listings in Gambia and Malawi.
According to Lloyd’s List, the ship – a “textbook example of deceptive shipping practices” – had also been investigated by Denmark’s intelligence services over its possible use to launch drones against Copenhagen’s airport, while operating under a different name. The ship had itself allegedly been targeted at one point with a limpet mine.
Countries that have sought to counter the shadow fleet are forced to rely on international laws and conventions over seaworthiness, insurance and safe navigation practises to put pressure on the vessels.
But an increasing international appetite for enforcement – including the Trump administration’s announcement in December that it would enforce a blockade against ships under sanctions visiting Venezuela – has brought it own risks.
It is not only Washington that has indicated it is prepared to intercept shadow fleet tankers. In October, the French president, Emmanuel Macron, signalled a greater willingness from Europeans to tackle vessels in its waters.
“We have decided to take a step forward by adopting policies to impede suspicious ships,” said Macron at a meeting in Copenhagen.
The risks implied in such a policy were underlined by an incident involving an oil tanker known in quick succession as Jaguar, Blint and then finally as the Russian-flagged Nasledie. An attempt by the Estonian navy to intercept the vessel in the Gulf of Finland in May prompted an incursion by a Russian Su-35 jet into Estonian airspace.
For Erausquin that suggests a more direct interest from the Kremlin in the shadow fleet, as demonstrated by Russia’s willingness to protect it.
As Chris Kremidas-Courtney, a senior fellow at the European Policy Centre argued in November, the shadow fleet poses greater threats than its key role in economically sustaining Russia’s war effort in Ukraine.
Kremidas-Courtney said: “Recent incidents underscore this threat. Russia-linked vessels have been implicated in drone incursions, cable disruptions and reconnaissance of critical infrastructure. The Eagle S [a suspected shadow tanker] severed undersea cables after cycling through multiple flags, and Estonia’s attempted interdiction of the Jaguar crude oil tanker prompted the scrambling of Russian fighter jets – proof that Moscow sees this fleet as a strategic asset and is willing to protect it. Europe cannot afford to let these incidents pass unanswered.”
Despite the tougher language from Europe, including discussion of seeking permission to board suspect tankers, some analysts do not detect a huge appetite for maritime confrontation with Russia.
“It is one thing for the US to board a sanctioned and stateless tanker off Venezuela because what is Venezuela going to do?” said one. “It feels like a very different calculation for the Europeans with Russia. It risks upping the stakes in what has become a game of chicken.”
If the shadow fleet, in particular the Russian element of it, has flourished in the past three years, it is partly due to US resistance to imposing sanctions on the major Russian oil producers, Rosneft and Lukoil, and through the continued reliance of China and India on Russian oil.
Russia has moved quickly to try and evade the new US sanctions, with several new companies emerging who are suspected of exporting Rosneft and Lukoil crude.
Despite the recent US sanctions, one of Russia’s most important markets for its crude appears to have been largely unaffected, despite pressure from Trump: Indian imports of Russian crude have increased since October.
In part that has been because of both Russia’s adaptability to sanctions over the past three years and the complex structuring of its shadow fleet operations, mirrored by similar activities over the years by Iran and Venezuela.
How Russia has operated in recent years was made clear this month in new EU sanctions announced against nine businessmen and entities, including shipping companies based in the UAE and Vietnam as well as Russia, accused of involvement in the shadow fleet.
Tomer Raanan, a specialist reporter for Lloyd’s List who closely follows developments in the shadow fleet both in the trade in Iranian energy products and Russia, believes it remains attractive to ship owners because of the potential profits that can be earned operating the sometimes dilapidated ships.
“Earlier this year, we noticed several sanctioned tankers suddenly began broadcasting AIS messages indicating that they are registered with Malawi.
“We found a website purporting to be the Malawi Maritime Administration which did not have a Malawi government domain and was later confirmed by Malawi officials as fraudulent. Since then, Lloyd’s List has uncovered an elaborate fraudulent flag operation linking over 20 separate fake registry websites, many of which using the same holding text.”
Such “scam” registrations were being used by ships in the shadow fleet, he said.
Raanan also believes the proliferation of fraudulent flags and falsely flagged ships highlights a critical problem with the shipping industry’s registry system.
In the meantime, he expects the sanction-busting trade in oil to continue despite the efforts to police it.
“Sanctioned oil is often sold at a discount, while shipowners moving these cargoes typically earn premiums for taking on the risk. I think that as long as market participants view the economic incentives as outweighing the risks, sanctions evasion will likely continue.”
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