UK sanctions more Russian shadow fleet vessels — but they won't stop Moscow’s oil trade, says economist

Cover photo: FSRU “Marshal Vasilevskiy”

The UK expanded its sanctions on Russia’s “shadow fleet” on Oct. 17, with the latest package targeting 18 crude oil tankers, three LNG tankers, the gas company Rusgazdobycha, and Russia's only floating storage and regasification unit (FSRU), “Marshal Vasilevskiy.”

The measures have added to the mounting regulatory restrictions on vessels transporting Russian oil sold above a price cap of $60 a barrel. In late 2022, an international coalition made up of the G7 countries, the European Union, and Australia imposed the cap in an effort to limit Moscow’s hydrocarbons income amid its ongoing invasion of Ukraine.

“The UK is leading the charge against Putin’s desperate and dangerous attempts to cling on to his energy revenues, with his shadow fleet placing coastlines across Europe and the world in jeopardy,” said UK Foreign Secretary David Lammy. “I have made it my personal mission to constrain the Kremlin, closing the net around Putin and his mafia state using every tool at my disposal.”

Effectiveness of sanctions remains uncertain

According to the British authorities, the sanctioned vessels helped Russia earn $4.9 billion from crude oil sales in the past year. However, economist Vladislav Inozemtsev told The Insider that these sanctions are unlikely to be notably effective, meaning Moscow will continue lining its coffers with proceeds from the oil trade — and financing its ongoing invasion of Ukraine.

“With this latest expansion, around 60 vessels are now under sanctions, out of several hundred. Some estimate the 'shadow fleet' to include around 1,000 tankers, which may be an overestimation, but it’s clear there are hundreds. Of these, only a few dozen are actually under sanctions. However, this does deter consumers. Naturally, many ports — particularly in Europe and the U.S. — refuse to accept these ships. Occasionally, even ports in India and China decline to receive them as well.

The exact mechanism [of the sanctions] is still unclear, as there haven’t been any cases where an entire port operator was sanctioned for accepting and unloading a sanctioned vessel. Western countries haven’t yet decided to blacklist ports like Mumbai or Shanghai, where these ships dock. Once sanctioned, these ships may be out of circulation for a while, but soon enough, some additional agreements are likely made, and they resume operations.