Russia has continued to export oil through a network of aging tankers, opaque ownership structures and alternative service providers despite successive rounds of sanctions targeting its fleet. While most Western insurers withdrew from Russia after Moscow’s full-scale invasion of Ukraine in February 2022, shadow fleet vessels have continued to obtain coverage through Russian insurers, shell companies and alternative arrangements outside traditional insurance markets.
“When you look at how Russia has developed alternative marine insurance arrangements for its shadow fleet, and the lengths it has gone to to keep oil moving through its logistics chain, it’s incredible,” said Michelle Wiese Bockmann, a senior maritime intelligence analyst at Windward. “It’s completely outside the general principles of rules-based order and maritime trade.”
Russia may not have the financial capacity to absorb the risks associated with the vast fleet it now depends on, according to an analyst at Deft9 Solutions, an intelligence firm that tracks shadow fleet activity.
“There are 1,700 ships, making voyages back and forth, and they need insurance every time,” the analyst said. The Russians “don’t have deep pockets right now.”
The liability exposure runs into the billions of dollars and some of that risk is likely finding its way back into European financial markets through reinsurance arrangements, secondary insurance structures and other financial products, said the analyst, who was granted anonymity because of the sensitivity of his work.
Tackling the circumvention of sanctions is a matter of priority, said a European Commission spokesperson who was granted anonymity in line with the institution’s rules. But it’s also “an ongoing process with new challenges, increasingly complex patterns and malicious actors emerging.”