Following the European Union’s embargo on imports of raw materials from the Russian Federation, a new pattern emerged in the global oil trade. Russia’s so-called shadow fleet—ships that transport Russian oil to destinations around the world—has surged to unprecedented levels. Analysts from Trafigura describe this as a record, with the fleet numbering around six hundred tankers. That figure accounts for roughly 27 percent of the world’s tanker capacity, underscoring how Russia has adapted to sanctions and kept oil moving despite restrictions. Bloomberg notes the scale and impact of this maritime system, with experts detailing how it bypasses direct embargoes and price caps.
The embargo on sea-borne Russian oil by European nations took effect on December 5, 2022. In early February of the following year, price ceilings for Russian petroleum products were set to begin, a policy agreed upon by the G7 members, Australia, and the European Union. These ceilings aim to limit revenue from oil and its derivatives while attempting to stabilize global crude and product markets amid sanctions. The measures are intended to curb excess profits from Russian exports, although market observers warn of potential ripple effects across energy and food prices in various regions.
Trafigura’s Ben Lacock, co-director of oil trading, emphasizes the scale of Russia’s shadow fleet and its strategic impact. By utilizing a large fleet of tankers, Moscow can mitigate the effects of the EU embargo and the price caps that aim to keep Russian oil priced at specific levels. Industry sources suggest that these tactics could contribute to higher energy and food costs by tens of percent in certain markets, particularly where sanctions restrict access to Russian materials. The broader implication is a reshaping of global energy logistics as sanctions push oil flows along alternative routes and through different trading networks.
On February 4, AFP reported that after the European Union, G7 nations, and Australia agreed on price limits of 100 dollars per barrel for higher-priced oil products and 45 dollars per barrel for discounted products, the market anticipated how these thresholds would be applied. The higher threshold targets oil sold at a premium, reflecting value-added processes, while the lower cap targets products traded at a discount tied to raw material costs. These distinctions illustrate the nuanced approach many buyers and traders face as they navigate sanctions and shifting supply chains.