Aggressive US sanctions against vessels transporting Russian oil are expected to have a substantial impact on trade flows, with Russia’s remaining shadow fleet unlikely to be large enough to fulfil demand, researchers believe. 

The outgoing Biden Administration announced on January 10 it had imposed sanctions on more than 150 individual vessels, as well as numerous commodity traders, insurance companies and entities involved in trading Russian oil – the largest action targeting tankers since the invasion of Ukraine in 2022. 

The vessels listed accounted for nearly half of all seaborne exports of Russian crude since 2023, with some making more than 20 voyages last year, according to research by maritime trade intelligence company Vortexa. 

Russia has amassed a fleet of non-western tankers to continue selling oil outside the G7’s price cap regime, but these vessels – which often deploy deceptive shipping practices and have been identified as an environmental hazard – are increasingly being targeted by sanctions authorities. 

Vortexa believes that the latest round of restrictions means the number of remaining non-sanctioned vessels “is not large enough to cover the shortfall if Russia wishes to keep crude export volumes at the same level”. 

“There is going to be significant tightening of the fleet,” Vortexa says in a market briefing seen by GTR. “The pool of non-sanctioned replacement tonnage that is non-western operated (with less barriers to entry) or already in the dark fleet is inadequate to keep up exports.” 

The impact of the latest sanctions is expected to be keenly felt in China and India, the two largest buyers of seaborne Russian crude, even though neither country has imposed restrictions on imports. 

This is because the US’ secondary sanctions regime allows authorities to penalise foreign financial institutions, which experts have identified as a strong deterrent to lenders in those countries. 

As a result, shipments to China and India – as well as other buyers such as Turkey – will likely have to rely “on a mix of a refreshed grey fleet and higher price cap adherence”, Vortexa says. 

Vortexa suggests that non-sanctioned shadow vessels could continue carrying Russian oil to China, as the shorter distance means the number of tankers required is relatively small. 

But exports to India and Turkey “will need to be offered below the price cap so that Greek Aframax and Suezmax operators can facilitate these volumes”, it says. 

India’s oil secretary, Pankaj Jain, told reporters last week that the country would continue to buy Russian oil if it was priced below US$60 per barrel and trades did not involve sanctioned entities. 

That scenario could place a sizeable dent in Russia’s oil export revenue. Research by the Centre for Research on Energy and Clean Air shows that last year, India became the second-largest importer of Russian crude and the largest exporter of refined fuel to the EU. 

Meanwhile, there is growing pressure from some price cap countries to tighten the restrictions further. 

Reuters reported in December that representatives from Denmark, Estonia, Finland, Latvia, Lithuania and Sweden had written a joint letter to the European Commission requesting that it reviews the level of the price cap. 

Sanctions “must be strengthened continuously” to deprive the Kremlin of funding for its military activities, and measures targeting oil revenues “reduce Russia’s single most important income source”, the letter said. 

In the US, President Trump’s special envoy to Ukraine and Russia, Keith Kellogg, said last week that US$45 per barrel would act as a “baseline break-even point” for Russian oil sales, urging the OPEC+ group to consider a price cut. 

The latest round of US sanctions also appears to have had wider effects on the oil market, driving up spot rates for very large crude carriers, Vortexa adds.  

Bloomberg reported earlier this month that in the wake of the restrictions, supertanker freight rates more than doubled for Chinese imports from the Middle East and the US Gulf Coast as a result of lower availability of tankers. 

The US Office of Foreign Assets Control (OFAC) says the latest actions “are ratcheting up the sanctions risk associated with Russia’s oil trade, including shipping and financial facilitation in support of Russia’s oil exports”. 

Maritime analytics firm Windward says the announcement shows shadow fleet operations “are now squarely in OFAC’s crosshairs”. 

“The implications are vast, impacting global shipping, energy markets, and compliance requirements across the maritime industry,” it says.