The CEO of Skuld, Ståle Hansen, has amplified concerns within the shipping industry regarding the rapid expansion of the “shadow fleet”—hundreds of tankers operating with inadequate insurance and maintenance. These vessels primarily serve sanctioned nations like Russia, Iran, and Venezuela in transporting their oil.
Growing Shadow Fleet
Hansen highlighted that Western sanctions, particularly those imposed by the G7 and EU, have compelled sanctioned countries to acquire older, vintage ships. Many of these vessels subsequently lose access to legitimate maritime service providers once identified by Western governments. This has led to the emergence of a “large and growing fleet which is not insured by any of the Western insurance companies,” with no P&I Clubs in contact with these vessels.
A recent study by S&P Global Commodity Insights and S&P Global Market Intelligence revealed that as of May, 940 crude and product tankers were confirmed by Western authorities as either having violated sanctions or being at high risk of doing so. A staggering 82% of these vessels lacked P&I coverage, a significant increase from April 2024 figures (591 tankers, 60% uninsured).
Hansen’s primary concern, echoed by many shipowners, is the development of a “parallel system for trade” characterized by “substandard vessels sailing without proper insurance.” This situation not only undermines the effectiveness of sanctions but also poses grave risks to maritime safety and the environment.
Countermeasures and Policy Recommendations
In response to this growing threat, Hansen urged Western governments to “learn about the potential consequences of the current sanction regimes” and to actively work towards ensuring that “at least that vessels trading in the oceans have a proper insurance cover in place.” He stressed the importance of authorities “listening to the industry” and insisted that shadow fleet tankers should adhere to the same safety regulations and insurance standards as mainstream ships.
Some steps have been taken by European nations. Northwest European countries have tightened their inspections on the insurance coverage of tankers carrying Russian oil through critical Baltic Sea lanes. This increased scrutiny has led to several shadow fleet tankers being detained by EU member states earlier this year. However, these actions can provoke responses; in May, Russia dispatched fighter jets to accompany a sanctioned tanker Estonia attempted to inspect, with one aircraft reportedly breaching Estonian airspace.
The concern remains that safety incidents and oil spills involving uninsured tankers could leave coastal states burdened with cleanup costs. Additionally, salvage companies might be hesitant to respond to such incidents due to fears of breaching sanctions, potentially exacerbating environmental and humanitarian crises.
Sanction Policies and Due Diligence
The insurer itself, Skuld, had to terminate its contracts with Sovcomflot, a major Russian state carrier, after it was sanctioned following the invasion of Ukraine in February 2022.
To maintain compliance, Skuld now requires existing customers to declare any Russian tanker businesses and conducts mandatory sanction checks for new clients. Hansen noted that “very few” of their tanker owners are currently trading with Russia. Skuld also employs AI to track clients’ trading patterns and closely monitors government sanction enforcement, although Hansen indicated the club would not exceed legally mandated requirements.
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Source: S&P Global
