After Western sanctions, an analysis has emerged that the size of the ‘shadow fleet’ carrying Russia’s crude oil has reached 600 and continues to increase.
On the 1st (local time), CNN, citing industry insiders, estimated that the size of the shadow fleet is about 600, or about 10% of the world’s large tankers.
The shadow fleet refers to ships that do not purchase Western insurance and do business with countries subject to Western sanctions. It is known that these ships are avoiding route tracking by operating with the mandatory automatic identification system (AIS) turned off.
The number of shadow fleets is increasing as trade in Russian crude oil has been cut off in European countries and trade in Asian countries such as China and India has increased.
According to the International Energy Agency (IAEA), China imported an average of 1.9 million barrels per day of crude oil from Russia last year, up 19% from 2021. India imported an average of 900,000 barrels per day, an 800% increase.
Commodity market analyst Kepler said Russia’s oil exports to China and India both hit record highs in January after the European Union banned imports of Russian crude by sea.
Transporting crude oil from Russia to Asia requires suitable tankers. Experts say that Russia’s export of crude oil to Asia is less efficient than export to Europe, and to overcome this, it will require a four-fold higher crude oil transport capacity. It is said that Russian flag ships do not have such transport capacity.
In addition, Western companies are under increasing burden of legal liability and reputational damage due to the transportation of crude oil from Russia. Russia, too, wants to stop doing business with Western companies, increasing its reliance on shadow fleets.
A senior executive at an oil transportation company told CNN that between 25 and 35 ships are sold to the shadow fleet each month. Global Witness, a non-profit organization, analyzed that about 25% of oil tanker transactions between the end of February last year and January this year did not have a clear buyer.
As the Chinese economy recovers and oil demand increases, the size of the shadow fleet is expected to increase further.
The industry is concerned that the cost of transporting crude oil will increase if the share of shadow fleets among the world’s oil tankers increases.
In addition, as Russia avoids Western sanctions with its shadow fleet, it becomes difficult to determine the price and scale of Russian crude oil exports.
The actual owner of the shadow fleet has not yet been specifically identified. There is a presumption that the Russian government is involved, but it is still at the level of suspicion.
Safety is also a concern as the true owner is not revealed. Most of the shadow fleets are operated with ships that are more than 15 years old, and the possibility of a major spill accident increases.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.