Over 1,000 ‘opaque fleet’ tankers involved in Russian oil trade since G7 price caps took effect: Vortexa

“Tankers (totalling 1,089) in the Russian trade account for 75% of the opaque fleet; this includes tankers which have operated in more than one market. Tankers exclusively in the Russian trade (not in Iran and Venezuela) account for 66% of the opaque fleet,” Vortexa said in a recent report, adding that overall, 1,649 unique tankers operated in the opaque oil and petroleum products market since January 2021.

The opaque tanker fleet refers to vessels involved in Russian, Iranian, and Venezuelan crude oil and petroleum products trade. With Western fleet operators loath to get involved in the oil trade of these countries due to sanctions of varying degrees, operators from countries like Greece, Russia, and China, and tax havens like Marshall Islands, Liberia, and Panama have emerged as the major players. The oil and gas industries of Russia, Iran, and Venezuela have been under sanctions or restrictions from international powers, particularly the United States (US). Recently, the US eased sanctions on Venezuela’s oil sector, authorising oil exports without limitation for six months.

A large number of opaque fleet tankers have complex and obscure ownership structures and are registered in geographies with lax regulatory oversight. Often, such vessels, which are usually quite old, operate with substandard insurance and certifications. It is worth noting that a mysterious Mumbai-based shipper–Gatik Ship Management–had emerged out of nowhere to become one the largest transporters of Russian crude. At its peak, Gatik was the commercial manager of around 60 old crude oil and petroleum product tankers, valued at over $1.5 billion. By August, however, it had transferred all the tankers it managed to a web of related companies in the wake of the global attention and scrutiny it attracted for moving Russian oil.

In the case of Russia, while there are no outright sanctions by the G7 countries on the country’s oil and petroleum products trade, price caps were imposed to punish Russia for the war in Ukraine. These caps–$60 a barrel for crude oil, $100 for refined products that trade at a premium to crude (like diesel, petrol, and jet fuel), and $45 for discount-to-crude products like fuel oil–were imposed with the objective of impairing Russia’s ability to fund its war in Ukraine with oil revenue, while keeping the international market adequately supplied. Western shippers and insurers are barred from getting involved in trades that are above the price caps.

According to the analysis by Vortexa, tankers operating in opaque markets reached a record high in the April-June quarter, when crude oil exports from the three opaque markets touched a four-year high. In the July-September quarter, the opaque market taker activities declined 10 per cent sequentially, reflecting lower exports from Russia and Iran during that period.

Opaque market tanker activity so far in October-December suggests a possible further slowdown, “possibly as US efforts to crack down on the implementation of the price cap mechanism in Russian sanctions” could reduce the number of tanker operators willing to participate in trade of Russian crude over the $60 price cap, as per Vortexa. In November, the US sanctioned a few maritime companies and tankers for shipping Russian oil sold above the G7 price cap in a bid to tighten shippers’ compliance. Few of the sanctioned tankers had transported Russian oil to India over the preceding months.