By Maggie Johnson
January 11, 2025
An audit reveals that over 80% of vessels under sanctions lack confirmed insurance, with data from S&P Global Market Intelligence showing more than 800 out of 1,000 sanctioned ships are uninsured. These ships, averaging 21 years in age, are significantly older than the global average of 13 years, raising concerns about the potential for costly environmental disasters from this so-called shadow fleet.
Despite a slowdown, the shadow fleet continues to expand, with brokers BRS reporting growth of about 10 tankers per month. Estimates from broker Gibson indicate nearly two-thirds of these aging tankers transported cargo from Iran, Venezuela, or Russia in the past year.
Allianz's 2024 shipping report highlighted the risks posed by the shadow fleet, stating: "Despite efforts to crack down on these vessels, the number of tankers is increasing, and we've observed several groundings and collisions."
The UK and northern European countries have recently intensified efforts to verify the insurance status of vessels transporting Russian cargo through the Baltic Sea and the English Channel. The Danish government spearheaded discussions last year to explore ways of restricting Russia's shadow fleet from transiting the Baltic. These talks gained urgency following a collision in March involving a Russian shadow tanker carrying oil.
Approximately one-third of Russia's seaborne oil exports pass through the Danish Straits, with an estimated one in three of these vessels lacking confirmed insurance. Currently, around 175 tankers loaded with Russian oil traverse the Baltic each month, according to Craig Kennedy, author of the Navigating Russia Substack. Kennedy, who proposed similar insurance verification measures in a Brookings Institution paper, sees this initiative as a critical step in limiting Russia's shadow fleet operations.
If the Baltic insurance checks succeed, Kennedy suggests replicating the program in the Aegean Sea. "Together with the Baltic, this would prevent Russia from using up to 80% of its shadow tankers for oil exports. Instead, it would force reliance on mainstream tankers, exposing export revenues to price cap constraints," Kennedy explained.
The shadow fleet's expansion and reliance on aging, uninsured tankers present significant risks to global maritime safety and the environment. Efforts like the Baltic insurance verification program aim to address these risks while tightening restrictions on sanctioned cargoes.
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