Over the past year, as Russia has gone all in on its war in Ukraine, Western nations have sought to turn the world against President Vladimir Putin and the web of unsavory characters who surround him. Key in that battle has been to wean countries, particularly those in Europe, off of Russian oil, a tactic meant to starve Moscow of revenues that fund the war.
But Russia, the world's second-largest crude exporter, has adapted to keep its oil businesses afloat. And in doing so, it has reshaped decades-old trading patterns and split the world's energy system in two, my colleague Julia Horowitz reports.
Here's the deal: At any given time, tens of thousands of container ships and oil tankers are traversing the globe, keeping the great big world economy humming. Mixed in among that traffic, right now, are about 600 mysterious oil tankers that make up Russia's so-called shadow fleet.
"There's the fleet that is not doing any Russian business, and then there's the fleet that's almost exclusively doing Russian business," said Richard Matthews, head of research at EA Gibson, an international shipbroker.
There's a lot we don't know about the shadow fleet. Like, who owns the ships? (A bunch of murky shell companies have swooped in over the past year, buying up old ships that might have otherwise ended up in the scrapyard.) And where the heck are they? (There's evidence many have turned off their transponders to stay, quite literally, under the radar.)
What we do know is that the shadow fleet is growing.
As Europe has (mostly) weaned itself off Russian energy, buyers in Asia are cutting deals. China boosted imports of Russian oil to 1.9 million barrels a day on average in 2022, up 19% from 2021, according to the International Energy Agency. India ramped up purchases even more sharply, logging a whopping 800% increase to an average of 900,000 barrels a day.
Russia's oil exports to China and India both hit record highs in January after Europe's ban on seaborne Russian oil took effect, according to Kpler, a data and analytics company.
Filling these orders requires big ships owned by entities that don't mind the added legal risk posed by sanctions and price caps. (Russia doesn't have enough vessels of its own.)
Cue the shadow fleet.
"The dark fleet that has been around carrying Venezuelan and Iranian oil globally is something we all expected to grow, and it has," said Janiv Shah, senior analyst at Rystad Energy, a consultancy.
An estimated 25 to 35 vessels are being sold each month into the shadow fleet, according to a senior executive at an oil trading firm. And the number of unknown buyers involved in oil tanker sales last year roughly doubled from 2021, according to the nonprofit Global Witness.
Why it matters
There are any number of reasons why this is a huge problem.
Not least: Russia's appears to be figuring out how to keep the revenue stream flowing, which keeps its brutal assault against Ukraine well funded.
Then there are the ships themselves, a portion of which are believed to be more than 15 years old, the age when mainstream oil companies would typically retire them.
"You've got all these old vessels that are probably not being maintained to the standard they should be," said Matthews of EA Gibson. "The likelihood of there being a major spill or accident is growing by the day as this fleet grows."
See Julia's full report on the shadow fleet here.
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