US Weighs Easing Shadow Fleet Sanctions, Raising Alarm Over Russia's War Funding

The ships at the center of this story are hard to see by design. Many of them switch off their location transponders at sea, which hides where their oil came from and where it is headed. They make up what is known as Russia's shadow fleet, and Washington is now reportedly weighing a way to bring some of them into legitimate trade.

Since Russia's full-scale invasion of Ukraine, Moscow has leaned increasingly on these tankers to get around Western sanctions and move its oil around the world. Iran and Venezuela, also heavily sanctioned, have been accused of using similar vessels. The fleet is made up largely of aging, uninsured and poorly maintained ships. It has still grown quickly, and S&P Global estimates it now accounts for nearly 19 percent of global oil tanker capacity.

Elisabeth Braw, a senior fellow at the Atlantic Council, calls the fleet a scourge. In her view it is in nobody's interest to have such ships on the world's oceans, because they weaken maritime order and raise the risk of accidents and environmental damage. She told DW that every country should use its leverage with Russia to press it to stop using them, since all countries eventually bear the consequences.

Until now, the United States and European countries have been stepping up efforts to intercept tankers accused of violating sanctions, in order to squeeze Russia's oil export revenues. But the Trump administration is reportedly considering lifting sanctions on some shadow fleet vessels so they can carry oil that is not sanctioned. A US official told Reuters earlier this month that the aim was to ease record-high global freight rates.

Critics see a costly trade-off. Michael Carpenter, a senior fellow at the International Institute for Strategic Studies and a former US ambassador to the OSCE, said such a move would reduce the sanctions regime's overall effectiveness. He argued it rewards the aggressor and helps Moscow earn revenue to keep attacking Ukraine, calling it the opposite of what Washington should do if it wants the war to end. He added that it would put the US and EU strategically at odds. Ben Harris of the Brookings Institution agreed, saying it would make it substantially easier for Russia to sell its oil at market rates and would improve government finances that depend heavily on energy markets.

US Energy Secretary Chris Wright rejects the idea that sanctions are being removed. Bloomberg quoted him last week saying the US is converting dark tankers into legitimate ones and that there is no removing of sanctions. He said the government is working with investors who buy idle sanctioned tankers, refurbish them and use them to carry oil that is not sanctioned. Some ships, he said, would move from the bad-guy fleet to the good-guy fleet and would no longer carry sanctioned oil. No detailed plan has been published.

The proposal follows a deal Trump struck with Vladimir Putin this month to allow Russian diesel onto global markets, seen as part of an effort to lower domestic fuel prices before the US midterm elections on November 3. Trump also waived broad new sanctions on Russia that recent legislation had authorized, which targeted Moscow's energy revenues and threatened tariffs on the largest buyers of Russian oil and gas. Ukraine and its European allies sharply criticized the waiver, fearing it would erode the credibility of sanctions.

If Washington steps back, Harris said, responsibility shifts to Europe, which has less effective options because it cannot credibly threaten to cut offenders off from the US financial system. Europe does have tools, though, thanks to its role in shipping and insurance. It could require tankers to carry legitimate, established insurance in its waters, which would mean many shadow fleet ships could not legally carry Russian oil. It could also press other countries to regulate vessels flying their flags.

Carpenter noted that most of the fleet crosses the Baltic Sea and leaves through the Danish Strait, a chokepoint where the EU is uniquely placed to board and inspect ships. But Russia has threatened to seize European-owned ships in retaliation for seizures of suspected shadow fleet vessels, and without US backing, he said, it will be harder for EU states to shoulder the burdens and risks. Braw said Europe will need to stay united and work with Japan, Australia and Canada, but what it can do alone is far less than what it could do with the US on the team.