The United States and its allies are considering additional sanctions and could move further to increase the cost of Russia’s use of a shadow fleet of tankers to evade a ceiling set by the Group of Seven countries on the price of Russian oil.
What are the shadow fleets that are used by several countries around the world?
Shadow fleets
“Shadow fleets” refer to maritime transportation networks that operate covertly to transport oil and other goods under cover of blackout to avoid international sanctions or trade restrictions.
These fleets often operate in “devious ways” that include changing flags, turning off tracking devices, and using front companies.
Operating motives
- Avoid international sanctions, especially sanctions imposed on countries such as Iran and Venezuela.
- Making profits by taking advantage of price differences in black or gray markets.
“The shadow fleet is also used to avoid the normal business model” such as high insurance costs, AFP reported.
This type of ship, also called “mysterious fleets,” is used in countries subject to US oil sanctions, even North Korea, according to Atlantic Council researcher Elizabeth Brow.
Mechanisms of action
- Changing Flags: Ships change their flag frequently to avoid tracking.
- Turn off tracking devices: Ships turn off tracking systems such as AIS (Automatic Identification System).
- Use of shell companies: Registering ships in the name of shell companies or in countries with lax maritime laws.
The most prominent shadow fleets in the world
Iranian shadow fleet
Iran is using shadow fleets to transport crude oil to international markets to avoid US sanctions. Techniques used include changing flags and turning off tracking systems.
Venezuelan Shadow Fleet
Venezuela operates a secret network to transport oil to countries such as China and India, avoiding economic sanctions imposed on it. Venezuelan ships use technologies similar to those used by Iran.
North Korean Shadow Fleet
North Korea uses shadow fleets to transport coal and other products to China and other countries, avoiding international sanctions. North Korean ships use techniques to change flags and turn off tracking devices.
Russian Shadow Fleet
Russia uses shadow fleets to export oil, gas and other raw materials to Europe and Asia to avoid international sanctions. Business techniques include changing flags, turning off tracking devices, and using shell companies.
According to a Bloomberg report in 2023, Russia’s ways of circumventing Western sanctions have boosted the business of dozens of merchants and shipping companies that are difficult to track, at a time when they receive $11 billion annually from Moscow’s oil revenues between the time the oil leaves Russia and until it reaches buyers.
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