G-7 plans to prevent Russia from using shadow fleet

The Group of Seven (G-7) are planning to prevent Russia from using a vast shadow fleet of tankers to transport oil, which is one of the latest Western sanctions on Moscow, a UK official told Bloomberg.

Following the establishment of a price cap on oil, Russia, with the assistance of shipping companies and mystery traders, put together a fleet of hundreds of tankers to transport its oil.

This allowed Moscow to transport oil without relying on Western services, which up until the conflict in Ukraine, such as ships, insurance, and financing.

Nevertheless, Olga Dimitrescu, head of engagement for the oil price cap at the UK Office of Financial Sanctions Implementation, says that now the countries that agreed to the price cap are trying to make those cargoes return to Western service providers.

“What we want to do is force these volumes back into the G-7 fleet,” she said in a podcast with NorthStandard, one of the world’s top insurers against risks like oil spills and collisions involving ships. “We’re making it harder for Russia to use its shadow fleet, which in turn would force more volume back into the G-7 fleet where service providers are compliant with the cap.”

She further stated that as part of those efforts, talks regarding the marine and environmental risks posed by the shadow fleet have taken place with governments all over the world.

Moreover, the European Union has taken action to limit the sale of outdated tankers to unidentified buyers, thereby increasing the difficulty of expanding the shadow fleet.

The US announced late last year that it intended to increase the price cap’s enforcement following the imposition of numerous sanctions on ships and businesses that were thought to have violated the rule.

The number of designations has decreased since then, but according to Dimitrescu, more actions are anticipated in the second quarter.

“In the second quarter, we’ll very likely up the ante on enforcement and continue taking action against actors engaged in deceptive practices,” she said. “Our overall priority is to tighten compliance and enforcement of the policy mechanism.”