Iran’s shadow fleet of tankers helps the Russian Federation transport oil subject to sanctions

Tankers in Iran’s shadow fleet have been helping transport Russian oil since new sanctions against the Russian Federation took effect in December, prompting the country to resort to the same sanctions-busting methods as Iran.

This is stated in the study Financial Times.

The entry into force of the embargo on Russian oil by the EU on December 5 and the introduction by the G7 countries of the price ceiling for oil from the Russian Federation encourages Russia to circumvent sanctions with the same methods that were once first used by Iran.

At least 16 vessels that were part of the shadow fleet that allowed Iran to defy US sanctions have begun shipping Russian oil over the past two months. Before this surge, only nine vessels had switched to the Russian route within nine months since the beginning of the Russian Federation’s full-scale war against Ukraine.

The analysis shows that volumes of Russian oil carried by vessels belonging to the shadow fleet increased from less than 3 million barrels in November to more than 9 million barrels in January.

Shipbrokers and analysts say Russia is luring tanker owners and operators with premium rates as it seeks to protect its main source of export earnings from Western measures such as G7 oil price caps. Such a premium is at least 50% above market rates, and in some cases may even exceed 100%.

As a result, “shadow” transportation of Russian oil becomes more attractive than Iranian oil. Western sanctions against Russia are less onerous than US sanctions against Iran.

In particular, shipping brokers say that having a price cap instead of a blanket embargo makes trade with Russia more attractive than trade with Iran or other heavily sanctioned countries such as Venezuela. Shipowners and operators are less likely to violate these measures if they can prove they were notified that Russian fuel was being sold at a price within the limit.

Some of the vessels currently serving the Russian route are vessels that were previously considered part of Moscow’s shadow fleet. According to estimates of ship brokers, it consists of about 100 vessels.