In June 2022, the EU and G7 countries imposed sanctions on Russia in response to its invasion of Ukraine. These sanctions included an oil embargo and a price cap on Russian oil. The price cap also restricted G7 countries from providing insurance coverage for Russian oil tankers that sold oil above the price cap, according to CREA.
Shadow Tankers
From January to August 2024, Europe has seen a 277% increase in ‘shadow’ tankers traversing the Danish Straits compared to the same period in 2022, with 64% of the 46 mn tonnes of Russian seaborne oil transported through the Danish Straits transported by ‘shadow’ tankers.
In the same period, the Dover and Gibraltar Straits saw a 355% increase in ‘shadow’ tankers compared to 2022, transporting 67% of the 37 mn tonnes of total oil transported through the straits.
The Suez Canal saw a 649% increase in ‘shadow’ tanker activity compared to the same period in 2022, with the passage of 52 mn tonnes of Russian crude from January to August 2024, 69% carried by ‘shadow’ tankers.
The Korean Straits recorded an increase in volume of 351% compared to 2022, with the passage of 35 mn tonnes of cargo and ‘shadow’ tankers responsible for 89% of this volume. The Strait of Malacca saw 5.7 mn tonnes of Russian crude oil, with ‘shadow’ tankers accounting for 72%, making an increase of 151% compared to the same period in 2022. Although the volume of Russian crude passing through the Strait of Malacca is lower than other straits, it is the primary maritime choke point in Asia and the largest globally for oil.
Russian Crude Oil
The dominant vessel in the Russian ‘shadow’ fleet is capable of carrying approximately 100,000 tonnes of crude oil. The average cleanup cost in Europe is estimated at USD 8,595 per tonne of oil spilled. Southeast Asia incurs significantly higher expenses, with cleanup costs averaging approximately USD 16,006 per tonne. The cleanup costs for an oil spill involving a typical ‘shadow’ tanker could range from USD 859 mn in Europe to USD 1.6 bn in Southeast Asia.
‘Shadow’ tankers have already been involved in 50 incidents from the Danish Straits all the way to Malaysia since the start of the full-scale invasion of Ukraine. These ageing vessels frequently operate with inadequate or no protection and indemnity (P&I) insurance while transporting vast volumes of crude oil on high-traffic routes through narrow straits close to shoreline while concealing their location.
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Source: CREA
