- Urals Crude Trades Above Cap as India, China Remain Key Buyers.
- U.S. Imposes 50% Tariff on Indian Crude Imports.
- Refined Russian Products Flow Back Into Western Markets.
The U.S. Senate has put forward the SHADOW Fleets Act, aiming to impose sanctions on Russia’s so-called shadow fleet. If this legislation goes through, it would broaden the penalties to include vessels, operators, and insurers involved in transporting Russian crude that exceeds the G7/EU price cap. It would also target Arctic LNG and new projects. This initiative comes on the heels of fresh sanctions from the EU, UK, Canada, and Australia, all designed to limit Moscow’s maritime income, reports Break Wave Advisors.
Narrowing Discounts, India in Focus
Since August, Urals crude has been trading between US$61 and US$65 per barrel, while Brent has been slightly higher at US$65 to US$69. China remains Russia’s largest buyer, but India has emerged as a crucial market. After India stood firm against U.S. pressure to reduce its imports, Washington slapped a 50% tariff on Indian crude on August 27. Nevertheless, Indian refiners are still actively purchasing, leveraging their sophisticated systems to efficiently process Urals. The refined products, like diesel and jet fuel, are making their way to Europe and the U.S., effectively recycling sanctioned barrels back into Western markets.
Growth of the Shadow Fleet
To keep the oil flowing, Russia has turned to a parallel shadow fleet, which now makes up 19% of the global tanker capacity, translating to around 980 ships, according to S&P Global. Many of these vessels are older, uninsured, and often have unclear cargo origins due to ship-to-ship transfers and AIS manipulation. While this fleet’s growth helps counter Western sanctions, it also heightens the risks of accidents, pollution, and enforcement challenges.
A Three-Tier Market
Sanctions have created a divide in the tanker market:
- Cleared Fleet – Transparent, insured, and lower costs.
- Grey Fleet – Transports sanctioned cargo with partial compliance.
- Shadow Fleet – Completely opaque, uninsured, and carries higher risks.
This segmentation is reshaping freight dynamics and amplifying systemic risks in shipping.
Europe’s 19th Sanctions Package
The European Commission has put forth a proposal to ban all Russian LNG imports by January 1, 2027, which is sooner than initially planned. This new package aims to blacklist an additional 118 shadow fleet vessels, pushing the total number to over 560, and it will also impose stricter restrictions on Rosneft, Gazprom Neft, and networks involved in sanction evasion. The oil price cap remains set at $47.60. For this to be finalised, it will need the consensus of all EU member states.
Key Takeaways
The U.S. Senate bill signals Washington’s intent to extend sanctions beyond Russia’s tanker fleet to the wider global networks sustaining its trade. The EU’s tougher measures, including a lower oil price cap and expanded vessel blacklists, reinforce this pressure.
The result is a fractured tanker market divided into clear, grey, and shadow fleets—reflecting not only shipping practices but deeper global divides with far-reaching implications for freight dynamics, regulatory compliance, and maritime risk.
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Source: Break Wave Advisors
