The introduction of comprehensive sanctions by the Biden administration has led to significant disruptions for Russia’s shadow fleet of oil tankers, with severe consequences for the country’s oil exports. As of 14 January, reports indicate that 65 Russian tankers have been stranded globally, unable to access ports or find buyers. These sanctions target vessels involved in transporting oil above the price cap of $60 per barrel, affecting over 200 tankers.
Global Stranded Tankers
The fallout has seen Russian tankers immobilised in diverse locations, from the coasts of China and Singapore to the Baltic Sea and the Far East. According to shipping tracking data, five tankers are near China’s coast, seven are stranded near Singapore, while others linger in Iranian ports or close to the Suez Canal. Compounding this issue, China and India, two of Russia’s largest oil buyers, have refused to accept sanctioned tankers.
In China, reports suggest Shandong Port Group, which operates ports in Shandong Province, has barred vessels targeted by sanctions. For instance, a number of tankers which carried over 2 million barrels of oil, were turned away after being sanctioned by the U.S. These tankers remain stranded off China’s eastern coast. Similarly, India’s ports now demand certificates of origin to ensure oil does not originate from sanctioned Russian suppliers, further crippling Russia’s shadow fleet operations.
Ageing Fleet and Technical Failures
Russia’s shadow fleet consists largely of ageing tankers, many over 20 years old. These vessels were acquired cheaply when initial sanctions against Russian oil exports were imposed. Designed as a workaround to circumvent restrictions, these ships are prone to breakdowns due to their age and lack of proper maintenance. For example, a tanker drifting near Germany reportedly suffered an engine failure.
The fleet’s reliance on outdated vessels has turned into a liability. While this strategy initially allowed Russia to maintain its oil exports, the introduction of stricter measures has exposed the operational and logistical vulnerabilities of the shadow fleet.
Economic Implications
The sanctions’ impact on Russia’s economy is mounting. Estimates suggest a loss of $20-30 billion in annual revenue due to the restricted capacity to export oil. Coupled with declining oil prices and a reduced market share, these measures have severely limited Russia’s ability to sustain its wartime economy. Moreover, the Russian budget deficit continues to grow, with the National Wealth Fund depleted by $50 billion since the onset of the invasion of Ukraine in 2022.
Strategic Shift by the Biden Administration
The Biden administration’s decision to impose stricter sanctions reflects a strategic recalibration. Initially cautious about the global economic impact of restricting Russian oil exports, the U.S. has now prioritised undermining Russia’s financial stability. The sanctions target not only oil tankers but also gas carriers like the Cool Rover, linked to Gazprom, which is currently stranded off Spain’s coast.
These measures align with broader efforts to disrupt Russia’s energy sector. Ukraine has also intensified attacks on Russian oil infrastructure, including refineries and storage facilities, further hampering the country’s ability to export energy. Notably, a recent strike on a refinery in Saratov caused significant damage to processing facilities.
Long-Term Challenges for Russia
Russia’s shadow fleet was a critical element in circumventing previous sanctions, enabling the country to sustain revenue streams from oil exports. However, the current sanctions have exposed the limitations of this approach. Without access to key markets in China and India, and with its ageing fleet increasingly sidelined, Russia faces a bleak outlook.
The economic repercussions are compounded by dwindling foreign reserves and the growing strain on domestic resources. Social services, including healthcare and education, are likely to see further budget cuts as the government prioritises military spending. With inflation spiralling and labour shortages worsening, public dissatisfaction is expected to grow.
Read also:
Tanker Accused of Baltic Cable Damage Was Preparing Additional Attacks
