Russian Shadow Fleet Continues to Fund War Efforts Despite Sanctions
Before sanctions were imposed in 2022, nearly 90 percent of Russia’s fossil fuel exports were transported through the regular Western market. The Russian shadow fleet, which Moscow began assembling before the EU embargo, is not simply redirecting Russian oil to new Asian markets, however. It was deliberately assembled to circumvent the G-7+ oil price cap, which permits trade in Russian crude only if sold at a price below $60 a barrel. The cap relies on Western insurers to verify compliance, but Moscow built a closed system where every link—shipowner, manager, insurer, and flag registry—operates outside G-7 jurisdiction.
Since 2021, shadow tankers’ share of Russian oil shipments has risen from 13 to 47 percent, as of this August. By the third year of the war, the fleet accounted for roughly a third of Russia’s fossil fuel export revenues, while fossil fuels overall continue to sustain 30-50 percent of the federal budget—and fund Moscow’s war in Ukraine.
NATO Embargo Unrealistic; Focus Shifts to Shadow Fleet
U.S. President Joe Biden has declared that he is ready to impose sweeping sanctions on Russia—if NATO countries stopped buying Russian oil. Bold as it sounds, the reality is more complicated. Only three of NATO’s 32 members—Hungary, Slovakia, and Turkey—still import Russian oil, while the European Union has committed to phasing out Russian fossil fuels by the end of 2027. Turkey, one of Russia’s largest customers, shows no inclination to align with the West, making a full NATO embargo unrealistic.
So if buyers cannot be persuaded to walk away from Moscow, where can Washington, Brussels, and the G-7 still act to choke Russia’s war economy in ways that are both practical and effective? The answer lies not in waiting for 2027 or hoping Ankara changes course but in a more immediate target: the shadow fleet, whose operations reveal how Russia continues to fund its war while evading the West’s most powerful economic tools.
Shadow Fleet Operations Undermine Sanctions’ Credibility
Beyond the financial toll, the shadow fleet undermines the credibility of sanctions as a foreign-policy instrument. The reason Russia’s economy remains resilient is because sanctions are not addressing the root issue: the shadow fleet. As long as this closed system exists, Moscow will continue to find ways to circumvent international pressure and fund its war efforts.
The focus must shift from waiting for NATO countries to align or for the EU embargo to take effect in 2027. Instead, policymakers should prioritize targeting the shadow fleet, which is the lifeblood of Russia’s war economy. By doing so, they can effectively choke off Moscow’s ability to fund its military endeavors and bring pressure on the Kremlin to reconsider its aggressive stance.
Original Article: The ‘Paper Tiger’ Still Has Its Shadow Fleet — Foreignpolicy