Tankers in Iran’s “ghost fleet” have switched to carrying Russian oil since western curbs on Moscow intensified in December, as the Kremlin turned to sanctions-busting techniques pioneered by Tehran.
At least 16 vessels that formed part of the “ghost” network that allowed Iran to breach US sanctions have begun to ship Russian crude oil over the past two months, according to Financial Times research.
Before the surge, just nine vessels had switched on to the Russian route during the nine months since the start of the war in February last year.
So-called ghost ships are vessels that disguise their ownership and movements in order to facilitate breaches of sanctions. Networks of ghost ships enable the trade in Iranian and Venezuelan oil.
Shipbrokers and analysts said that Russia was enticing tanker owners and operators with premium rates, as it seeks to shield its main source of export revenues from western measures such as the G7/EU oil price cap. Estimated Russian oil export revenue is markedly down on its prewar levels.
“We’ve seen a number of vessels involved in Russian trade that previously did Iranian barrels,” said Svetlana Lobaciova, a tanker analyst at shipbrokers EA Gibson in London.
“The premium for Russian trade is at least 50 per cent above the normal market rates and could be even more than 100 per cent in some instances, making the economics even more attractive than shipping Iranian oil.”
Iran has been able to maintain or even increase its crude exports in recent months. Tehran, which co-operates on oil policy with Moscow through the Opec+ group, has emerged as a key backer for Russian president Vladimir Putin’s invasion of Ukraine.
Competition for vessels is a possible source of tension in the relationship. However, Matthew Wright, an analyst at Kpler, a data and analytics company, said: “An increase in the number of ships in the ghost fleets owned through secretive offshore entities, which enables sanctions evasion, appears to have helped avoid much of a problem with sourcing vessels.”
The FT identified vessels involved in the Iranian ghost fleet using a list of 288 ships subject to sanctions-breaching complaints to marine registries and insurance companies by United Against Nuclear Iran, a US-based group that campaigns for tough enforcement of sanctions.
The FT checked the methods used by UANI for identifying ghost fleet members by reviewing a sample of its analyses, which are based on ship movement data and satellite photography. The FT also checked that the findings on specific ships were consistent with those of other organisations. Data from Kpler was then used to monitor these vessels’ recent cargoes.
Strains in tanker markets are expected to be exacerbated in the coming weeks. EU sanctions and the G7 price cap were both extended on Sunday to include Russia’s exports of refined fuels such as diesel and petrol.
Russia has already had to reroute a lot of its crude to Asia after a ban on seaborne imports of Russian crude to the EU took effect on December 5. It will probably need to ship diesel and other fuels longer distances now that a similar ban is in place.
Western sanctions targeting Russia are less onerous than US sanctions targeting Iran. The G7 price cap is also partly designed to limit revenues to the Kremlin while keeping enough Russian barrels in the market to avoid shortages.
Shipbrokers said terms made the Russian trade more attractive than dealing with Iran or other heavily sanctioned countries such as Venezuela. Ship owners and operators are less likely to fall foul of the measures if they can show they were told the Russian fuel was sold under the cap.
FT analysis suggests that the volumes of Russian crude being shipped on vessels identified as being part of the ghost fleet have surged from less than 3mn barrels in November to more than 9mn barrels in January.
One shipbroker said that while a handful of large tanker operators were still shunning Russian oil trade, such as western oil majors and US ship operators, many others were willing to take part given the rates on offer and leeway in the rules.
“Everyone is a sinner now,” the shipbroker said. “The line between the grey market and the conventional tanker market has definitely gotten blurrier in the past year.”
Some of the ships now serving the Russian route are vessels previously identified as likely to be part of Moscow’s own shadow fleet, a covertly controlled operation assembled over the past year. Shipbrokers have estimated that it consists of about 100 vessels.
Claire Jungman, chief of staff at UANI, said: “The ownership behind [ghost fleet] . . . vessels is often very opaque and disguised through numerous front companies that are constantly changing to avoid sanctions.”
Russian oil is still travelling in tankers operating with western insurance. Such insurance is only available on the condition the oil was bought for less than the price cap. The price for Russia’s main export-grade Urals oil has fallen to a discount of $30 to $40 a barrel below benchmark international crudes such as Brent.
Russian barrels from the Baltic and Black Sea have fallen to a large discount partly to cover the cost of shipping and as refiners in India and Turkey negotiate lower prices for crude that once flowed to the EU.
Lobaciova at EA Gibson said Russian oil deliveries had proved more lucrative because they did not face significant delays, unlike Iranian cargoes that often spend more time at sea to mask their origin. Refiners in countries such as China, which has remained a big buyer of Iranian oil, have also left tankers of Iranian oil waiting to unload.
“We have at times seen Iranian tankers waiting for months — as best as we can tell that hasn’t happened to Russian tankers, which is better for operators especially when rates for Russian routes are so high,” she said.
Source: Financial Times