Western governments, seeking to curb Russia's oil revenues funding the war in Ukraine, imposed a $60 per barrel price cap on Russian oil. In response, Russia developed a "shadow fleet" of vessels to bypass these sanctions. This fleet, estimated at 400 ships by mid-2025, moved approximately 4 million barrels of oil daily, representing about two-thirds of Russia's total oil exports and generating billions of dollars annually for the Kremlin.
Initially, companies like Eiger Shipping, a subsidiary of Lukoil, acquired these vessels through special purpose vehicles (SPVs) in places like the Marshall Islands. One individual, John Ormerod, set up companies to own 25 tankers worth over $700 million, funded by Eiger Shipping. While neither Lukoil nor Eiger Shipping were sanctioned at the time, Western governments have since started sanctioning individual vessels, leading to 17 of Ormerod's original 25 vessels being added to EU or UK sanctions lists.
The West's efforts to target the shadow fleet intensified, with detentions and seizures of falsely flagged vessels, particularly between January 2025 and June 2026. This crackdown led to a significant drop in vessels flying false flags, from a peak of 101 in October 2025 to 45 by June 2026. As a direct consequence, 107 vessels joined the Russian flag registry between January 2025 and June 2026, increasing the registry by 36% to 382 vessels. Notably, 87% of these newly registered vessels were already under sanctions, and 56% had previously flown at least one false flag. This move effectively prevents European navies from seizing them as stateless ships, though it raises concerns about safety and Russia's ability to fulfill flag-state obligations, as highlighted by the uncontrolled drift of the Arctic-Metagaz after an explosion.
Despite sanctions, the shadow fleet continues to grow, with estimates indicating it accounts for about 17% of all in-service oil tankers globally, totaling 940 ships by early this year, a 45% increase from the previous year. The continuous expansion of this fleet underscores a "cat and mouse" game between Western sanctions and Russia's adaptive strategies, where new vessels are acquired almost as quickly as others are sanctioned. Analysts suggest that the West's policies have inadvertently enlarged the shadow fleet to its current size, making it difficult to control going forward.
