Pirates of the XXI century: how the world is trying to resist the Russian shadow fleet

Alexey Gromov, Principal Director on Energy studies at the Institute for Energy and Finance, commented to Forbes about the future prospects of sanctions pressure on the "shadow" fleet, which provides marine exports of Russian oil.

"Our estimates are about the same: we believe that there are 550 vessels there, given that absolutely all vessels belonging to the shadow fleet transporting Russian oil cannot be determined for objective reasons," Alexey Gromov said. According to him, data on the number of tankers that are under blocking sanctions are also close to the truth.

"According to our estimates, there are 56 of them, that is, almost 60. And this is really about 10% of the fleet that transports Russian oil," Gromov notes. "From my point of view, of course, such a number of tankers that have fallen under blocking sanctions cannot stop the flow of Russian oil, including bypassing restrictions on the price cap."

There are two reasons why only 60 tankers are subject to blocking sanctions, although Western countries have declared, in fact, a crusade against the shadow fleet, Gromov says. The first reason, according to him, is that the application of the most severe forms of sanctions restrictions, which include blocking US sanctions, is a full—fledged legal process with the collection of evidence and the necessary legal procedures, which takes a long time. As a rule, it takes from several months to six months before a decision is made, and therefore it is hardly possible to block all tankers at the same time.

The second reason, Gromov points out, is that the United States, although fighting the shadow fleet, is not set up to completely block the transportation of Russian oil.

"On the one hand, it is demonstrated to all market participants that sanctions are being applied and will be applied," the analyst says. — Thus, the number of people willing to transport Russian oil is decreasing. On the other hand, freight rates are rising."

It is fundamentally important, the expert adds, that the United States, by its real actions against tankers, shows that it is ready to take the most serious steps towards blocking the work of vessels that have violated sanctions restrictions.

Many statements by European politicians, unlike the United States, are often declarative in nature and have not yet been supported by any serious actions, Gromov says.

"To take just one example, the possibility of restricting the passage of Russian oil cargo through the straits in the Baltic Sea," he says. — Any international waters are free for navigation, and it is not possible to restrict the use of any vessels there without a significant change in international legislation. But since such initiatives have been voiced, then in theory it can be assumed that if, God forbid, any significant disaster occurs with a tanker of the shadow fleet transporting Russian oil, for example, in the waters of the Baltic, then such a decision can be made. This may indeed turn out to be a very serious factor for Russian oil exports, up to a sharp aggravation of the geopolitical confrontation between Russia and Europe. I hope it doesn't come to that."

"India today accounts for half of Russia's oil shipping," Gromov says. And India accepts our full—cycle insurance."

Already in the first half of June, the United Kingdom imposed sanctions against Ingosstrakh, and the United States imposed sanctions against Sogaz and RNRC. It is not yet very clear how the inclusion of the largest insurers of the fleet transporting Russian oil in the sanctions lists may affect supplies, Gromov says. "This is another worrying sign," he argues. "In principle, if problems arise here, Russia will be forced to return to partial use of the services of Western insurance companies and in one form or another obey the price ceiling, even without acknowledging this fact."

There is also an important component of Western sanctions — pressure on countries that provide Russia with a convenient flag, Gromov points out.

Russia will continue to come up with ways to resist the sanctions pressure, Gromov predicts. The solution is to create an independent foreign trade circuit, for example, within the framework of BRICS. "All the restrictions related to the shadow fleet affect the financial sector," he recalls. — It is clear that no one wants to be disconnected from international trade and international financial payment systems. But an alternative independent foreign trade circuit can be created, within which cargo transportation can be carried out, including by shadow vessels that will not depend on Western capital markets. This can happen in a closed BRICS system, where there will be their own insurance instruments, their own financial payment systems, mutual settlements, their own port service zones and so on."

Given that the world is now increasingly moving towards multipolarity, the emergence of a parallel foreign trade circuit is a matter of time, Gromov believes.