Since the Russian invasion of Ukraine, a rise in oil tankers with unclear ownership has facilitated the creation of a ‘ghost fleet’ for circumventing international sanctions. Recent U.S. and U.K. sanctions target nearly 200 of these vessels. The fleet, which existed prior to the conflict, now comprises about 17% of all oil tankers and poses significant environmental risks due to aging ships lacking proper insurance, making operations hazardous.
Rise of the ‘Ghost Fleet’ Amid Sanctions
Since the onset of the Russian invasion of Ukraine, there has been a notable surge in the number of oil tankers operating with unclear ownership or insufficient insurance. This trend has enabled Russia to establish a covert fleet dedicated to exporting its oil, effectively circumventing international sanctions.
On Friday, the United States and the United Kingdom unveiled new sanctions targeting the Russian energy sector, focusing on nearly 200 oil and gas tankers linked to this so-called ‘ghost fleet.’
Understanding the Concept of a ‘Ghost Fleet’
The British government describes a ‘ghost fleet’ as a collection of vessels engaged in illicit activities aimed at bypassing sanctions, sidestepping safety or environmental regulations, evading insurance obligations, or participating in other unlawful operations.
Interestingly, this ‘shadow fleet’ existed prior to the conflict in Ukraine, serving countries like Iran and Venezuela, which are also under U.S. oil sanctions, as well as North Korea.
However, since the conflict began nearly three years ago, the size of the ‘ghost fleet’ has dramatically increased. The American think tank Atlantic Council reports that about 17% of all oil tankers are now part of this fleet, which also encompasses a variety of other merchant vessels.
Why Russia Relies on the Ghost Fleet
The imposition of oil embargoes, price caps on Russian crude, and bans on maritime service provisions have significantly targeted Russia’s oil revenue—crucial for financing its war efforts in Ukraine.
To sidestep these sanctions, Russia has reduced its reliance on Western shipping services by acquiring tankers with self-provided insurance. According to the KSE Institute of the Kyiv School of Economics, these tankers account for 90% of crude exports and 36% of petroleum product shipments from Russia, enabling the country to evade the $60 per barrel price cap while supporting its military operations.
In November 2024, it was reported that ‘196 tankers’ laden with crude oil departed from Russian ports.
Environmental and Safety Risks of the Ghost Fleet
The KSE Institute has raised alarms regarding the ‘significant environmental risks for the EU’ posed by these aging vessels. The Atlantic Council estimates that by early 2024, ships over 20 years old will make up 11% of the global oil tanker fleet by 2025, a sharp increase from just 3% before the Ukraine conflict.
These ghost ships often lack proper insurance, specifically Protection and Indemnity (P&I) coverage, which is essential for commercial vessels to safeguard against various risks, including war-related hazards, collisions, and environmental catastrophes like oil spills.
With 90 to 95% of the P&I insurance market controlled by insurers from the European Union and the United Kingdom—who enforce sanctions against Russia—alternative insurance options, often proposed by the Russian and Iranian governments, are deemed highly inadequate. Elisabeth Braw from the Atlantic Council highlights that these factors render working on board these vessels ‘extremely dangerous.’