Shadow fleet sanctions: Can the EU act if the US pulls back?

Since Russia's full-scale invasion of Ukraine, Moscow has increasingly relied on a so-called shadow fleet to bypass Western sanctions and transport its oil around the world.

Other heavily sanctioned countries, including Iran and Venezuela, have also been accused of using such vessels to export petroleum products.

These tankers often rely on deceptive practices like turning off their location transponders to evade detection and conceal the cargo's true origins or destinations.

The fleet, which consists largely of aging, uninsured and poorly maintained tankers, has raised widespread concern across the shipping industry. Yet it has expanded rapidly in recent years and now accounts for nearly 19% of global oil tanker capacity, according to estimates by financial intelligence firm S&P Global.

"The shadow fleet is a scourge," Elisabeth Braw, senior fellow at the think tank Atlantic Council, said, adding that "it is in nobody's interest" to have these ships sailing around in the world's oceans.

She pointed out that these tankers undermine the maritime order and increase the risk of accidents and environmental damage.

"Every country should use its leverage with Russia to ask it not to use the fleet," she told DW, noting that ultimately all countries suffer the consequences.

To clamp down on the fleet and curb Russia's oil export revenues, the United States and European countries have stepped up efforts to intercept tankers accused of violating sanctions.

The Trump administration, however, is reportedly considering lifting sanctions on some shadow fleet vessels and allowing them to transport oil that is not subject to sanctions.

A US official told Reuters earlier this month that the move was intended to ease record-high global freight rates.

Lifting sanctions on the shadow fleet "would decrease the effectiveness of the sanctions regime overall," said Michael Carpenter, senior fellow for Transatlantic Affairs at the International Institute for Strategic Studies (IISS). Such a move "rewards the aggressor and helps Moscow gain revenues to continue attacking Ukraine," he told DW.

"This is the exact opposite of what the US should be doing if it wants to end the war."

Carpenter, who previously served as US ambassador to the Organization for Security and Cooperation in Europe (OSCE), said any sanctions relief would also put the US and the EU "strategically at odds with each other, with the EU clearly backing Ukraine and the US increasingly supporting Russia's financial goals."

This view is shared by Ben Harris, vice president and director of Economic Studies at the Brookings Institution.

Lifting sanctions on shadow fleet tankers would "make it substantially easier for Russia to trade its oil at market rates," he said, pointing out that it would "improve its government finances since so much revenue is tied to energy markets."

US Energy Secretary Chris Wright, however, rejected suggestions that the US was removing sanctions from shadow fleet tankers.

"We are converting dark tankers to legitimate tankers," Bloomberg quoted Wright as saying last week. "There is no removing of sanctions," he stressed, adding that the US government was working with investors who buy idle sanctioned tankers, refurbish them and use them to transport oil that is not subject to sanctions.

"We're going to move some of the ships from what I call the 'bad-guy fleet' to the 'good-guy fleet,'" Wright said. "They will not carry sanctioned oil anymore."

The US government has yet to unveil a detailed plan for shadow fleet tankers.

The proposal follows a deal that US President Donald Trump struck with his Russian counterpart Vladimir Putin this month to allow sales of Russian diesel onto global markets.

The agreement was seen as part of Trump's efforts to lower domestic fuel prices ahead of the US midterm elections on November 3.

The US president also waived broad new sanctions on Russia authorized by ​a recent legislation, which targeted Moscow's energy revenues and threatened tariffs against the world's largest purchasers of Russian oil and gas.

The decision was sharply criticized by Ukraine and its European allies over concerns that it could undermine the credibility of sanctions and weaken Western economic pressure on Moscow.

Harris said that "the US sanctions carry outsized weight because of the threat [for countries and businesses] of being cut off from the US financial system."

If the US steps away from its sanctions on the shadow fleet, he argued, "the responsibility shifts to European policymakers." Still, they have "less effective options because of the diminished threat of severing financial ties."

Still, the expert stressed that Europe has some tools, pointing to the continent's key role in global shipping and insurance services.

"They can implement measures demanding that tankers carry legitimate and established insurance when traveling through their waters," he said, noting that it "would mean that many shadow fleet tankers could not in practice legally transport Russian oil."

Harris added that European policymakers could also pressure countries worldwide to better regulate the tankers flying their flags.

Carpenter said even if US eases some restrictions, the EU will have no choice but to continue enforcing its sanctions on these vessels.

"The vast majority of the shadow fleet traverses the Baltic Sea and exits it via the Danish Strait," he noted, adding that the EU is "uniquely positioned to board and inspect vessels moving through this key chokepoint."

But Russia has threatened to seize ships belonging to European countries in retaliation for interdicting and seizing Russian vessels suspected of being part of the shadow fleet.

And without US backing, Carpenter said, "it will be harder for EU countries to take on the burdens and risks of sanctions enforcement."

Braw echoed this view, saying that Ukraine's European allies will have to remain united and continue working closely with partners such as Japan, Australia and Canada. Nevertheless, she stressed that what they can achieve on their own "is far less than what they can achieve if the US is part of the team."