The Western sanctions imposed on Russia following its invasion of Ukraine have had a significant impact on the country's oil exports. However, Russia has found a way to circumvent these sanctions through the use of a shadow fleet of aging tankers with uncertain ownership and safety practices. This fleet, estimated to consist of over 400 ships, has helped Russia maintain its oil export revenues and fund its war efforts.

The shadow fleet has enabled Russia to evade the price cap imposed by the G7 countries and continue selling oil at higher prices. While the discount on Russian oil exports compared to Brent crude has shrunk from as much as $35 per barrel to less than $10 per barrel, Russia's oil income has remained relatively stable. In 2022, Russia's oil export revenues averaged $64 per barrel, 5% higher than in the same period in 2023.



The primary destinations for Russian oil exports via the shadow fleet have shifted significantly over time, with a notable increase in exports to Asia. Before the war, the EU accounted for nearly half of Russia's oil exports, but this share has since declined significantly. As of November 2022, before the new sanctions regime came into effect, Russia redirected its seaborne crude oil exports mainly to Asian countries, with China and India accounting for approximately 70% of Russian oil exports.

The shadow fleet's aging and potentially unsafe vessels also pose environmental risks, further complicating the situation. The average age of the vessels in the shadow fleet is around 18 years, raising concerns about the potential for oil spills and sabotage due to the ships' vulnerability to accidents and questionable safety practices.

In conclusion, while sanctions have been effective in limiting Russia's oil export revenues, the shadow fleet has played a significant role in undermining these efforts by helping Russia evade the price cap and maintain its oil income. The shadow fleet's aging and potentially unsafe vessels also pose environmental risks, further complicating the situation. To address these challenges, Western governments and sanctions experts must work together to identify and disrupt the shadow fleet's operations, while also addressing the environmental concerns associated with these aging vessels.