Dark fleet shipping sanctioned oil expands to 530 tankers after oil price cap breach - Lloyd's List

Dark fleet shipping sanctioned oil expands to 530 tankers after oil price cap breach :: Lloyd's List

Dark fleet shipping sanctioned oil expands to 530 tankers after oil price cap breach

Some 67% of the 530 tankers have no known insurance, and 14 have no known class

Global oil price gains have pushed prices for all Russian crude grades and diesel over thresholds of $60 per barrel for crude and $100 per barrel for diesel

THE dark fleet* of tankers plying sanctioned oil has expanded by 55 ships over the past three months, after the breach of G7 price caps on Russian oil accelerated demand for ships that can operate outside Western jurisdictions.

There are now some 530 elderly, anonymously owned tankers of 74.7m dwt solely deployed in sanctioned Venezuelan, Iranian and Russian crude and products trades, up 3.6% since June, according to Lloyd’s List’s quarterly update.

About 200 tankers are directly engaged in shipping Russian oil, analysis shows.

The dark fleet represents 11.6% of the internationally trading tanker fleet of around 5,400 tankers above 25,000 dwt. The global fleet of crude and product tankers from medium range one and above was estimated by BRS shipbrokers at 641m dwt as of August 2023.

Under sanctions fully imposed on Russia by the Group of Seven Industrialised nations last February, Western marine service providers including shipowners, oil traders, charterers, shipmanagers, insurers and banks cannot be involved in shipping Russian oil to third countries unless the cargo was sold at or below a price cap.

Since August, global oil price gains pushed prices for all Russian crude grades and diesel over thresholds of $60 per barrel for crude and $100 per barrel for diesel.

That is driven the need for more tankers to ship Russian oil outside the cap arrangements, even though exports have dipped in the past two months from highs seen last April.

The dark fleet has risen in response to US sanctions on Iran and Venezuela’s shipping and oil sectors first imposed more than four years ago, alongside deceptive shipping practices to obfuscate the cargo origin as well as the beneficial ownership.

Analysis of the dark fleet shows a complex network of brass plate addresses, shell companies in tax free havens worldwide, using a combination of well-known open flag registries alongside others with scant technical oversight and regulation.

What does emerge is that the nexus between China, Russia, India and the United Arab Emirates to facilitate sanctioned oil flows is strengthening.

Tankers managed from these countries — many via anonymous single-ship entities — now comprise 60% of the dark fleet of tankers* shipping Venezuelan, Iranian or Russian crude and refined products when measured by deadweight.

China is the destination for most of the 1.8m barrels per day of oil exported from Iran, as well as the estimated 400,000 bpd from Venezuela, with many of the largest tankers in the dark fleet having connections to Hong Kong or mainland shell companies.

India and China are the biggest importers of Russian crude, while the UAE has emerged as the oil trading hub for Russia, as well as its government-controlled shipowner Sovcomflot.

The biggest flag registry is Panama, which flags some 48% of all the dark fleet vessels, which is three times higher than its overall market share on the global market.

Liberia, the largest flag registry, flags 8% of dark fleet vessels, the majority of these in Russian trades. The registry also still flags tankers owned by Russian government controlled Sovcomflot.

Even though only nine tankers in the dark fleet are flagged in the Marshall Islands, the US-based registry is popular with anonymous, dark fleet owners for setting up single-ship companies as registered owners. Some 40% of the dark fleet based the registered owner at these brass plate addresses in the Marshall Islands.

The third most popular destination for registered ownership was Hong Kong and China.

The largest risks relate to insurance in the case of an oil spill or environmental incident: some 67% of the 530 tankers have no known insurance. This means they are not covered by the 12 clubs from the International Group that provide protection and indemnity for 95% of the global tanker fleet.

International Group coverage is seen as a proxy for cap compliance in Russian trades as clubs are not able to provide cover for vessels trading above the cap. Even if clubs that are not based in the US, Europe and UK, they reinsure risk in Western markets preventing them from offering services.

Class is unknown for 17% of tankers. A further 13% are not classed by members of the International Association of Classification Societies. Western sanctions on marine service providers for Russian shipping exempt class.

The number of shipowners and managers from Türkiye entering Russian oil and shipping markets has escalated sharply in the past two months after the breach of Western price caps pushed out Western operators loading compliant cargoes.

Tankers owned by or linked to marine service providers in Türkiye comprised 6% of the dark fleet* of vessels now shipping sanctioned Russian oil over August, with one well-known company taking on two ships formerly managed by Gatik Ship Management, formerly the biggest dark ship operator.

Before Russia invaded Ukraine, the number of tankers operating the dark fleet and shipping Iranian and Venezuelan oil stood at about 220 under Lloyd’s List methodology.

*Lloyd’s List defines a tanker as part of the dark fleet if it is aged 15 years or over, anonymously owned and/or has a corporate structure designed to obfuscate beneficial ownership discovery, solely deployed in sanctioned oil trades, and engaged in one or more of the deceptive shipping practices outlined by US State Department guidance issued in May 2020. The figures exclude tankers tracked to government-controlled shipping entities such as Russia’s Sovcomflot, or Iran’s National Iranian Tanker Co, and those already sanctioned. Download our explainer on the different risk profiles of the dark fleet here

Lloyd’s List Intelligence Seasearcher subscribers can add the Lloyd’s List dark fleet to their watchlists here