Somewhere in the Gulf of Oman, a tanker with no credible owner, no recognisable insurer, and a name freshly painted over a previous identity is transferring a cargo of crude oil from one vessel to another. No port authority is watching. The AIS transponder, the maritime equivalent of an aircraft’s black box, is either switched off or screaming coordinates from a location hundreds of miles away. By the time the oil reaches a refinery in India or China, its Russian origins will have vanished as completely as the ship itself from radar screens.
The Architecture of Disappearance
The shadow fleet, also called the ghost fleet or dark fleet, is arguably the most consequential loophole in the international sanctions architecture built since the Cold War. What began as a workaround has evolved into a parallel global oil economy, one that operates with such institutional sophistication that it has begun to structurally undermine the very concept of economic coercion as a foreign policy tool.
Before Western sanctions reshaped the trade in 2022, nearly 90% of Russia’s fossil fuel exports were transported through the regular Western market. What followed was not a collapse of Russian oil exports but the deliberate construction of a closed system, one where every link in the chain, from shipowner and manager to insurer and flag registry, operates entirely outside G7 jurisdiction.
According to data from the Kyiv School of Economics (KSE), since 2022, Russia has invested approximately $10 billion to expand this fleet, which now numbers over 400 dedicated vessels. Since the beginning of the invasion of Ukraine, the volume of Russian oil transported by these tankers has steadily increased, reaching 4.1 million barrels per day in June 2024. Today, the shadow fleet accounts for 70% of Russian seaborne oil and 89% of crude oil exports.
The Centre for Strategic and International Studies (CSIS) puts the numbers even more starkly. The ghost fleet transports an estimated 3.7 million barrels per day, representing 65% of Russia’s seaborne oil trade, and generates an estimated $87 to $100 billion in revenue per year, a figure that has, at points, matched or exceeded the total value of all economic and military assistance provided to Ukraine since the war began.
Old Ships, New Tricks
Two-thirds of ships carrying Russian oil have insurers classed as “unknown,” meaning the vessels effectively lack proper insurance. As they age, they are more prone to breakdown or leakage. The human cost of this is not theoretical. In December 2024, two ageing Russian tankers broke apart during a storm in the Kerch Strait, spilling up to 8,500 metric tons of heavy fuel oil into the Black Sea. Similar spills in Europe carry an estimated cleanup cost of $8,595 per tonne, meaning that the incident alone could cost between $20 million and $73 million, excluding environmental and legal liabilities.
What makes these ships especially difficult to track is the sophistication of their deception. In 2025, Lloyd’s List Intelligence recorded a significant uptick in spoofing-related incidents worldwide, driven by an expanding shadow fleet and growing adoption of deceptive shipping tactics to conceal the movement of sanctioned barrels. The Gulf of Oman has become a hub for the transhipment of Russian crude between sanctioned and non-sanctioned tankers.
AIS spoofing reached 212 incidents in May 2025 alone, 19% above the H2-2024 monthly average, while covert ship-to-ship transfers hit a record 316 in the same month, averaging around 224 per month across January to November 2025, a 129% jump from the prior baseline, according to Kpler.
The Price Cap’s Broken Promise
The G7 price cap, introduced in December 2022 to allow the world to keep buying Russian oil but only at or below $60 a barrel, was supposed to be the elegant solution. It would keep oil markets stable while strangling Kremlin revenue. It has done neither with full effect.
The cap relies on Western insurers to verify compliance. But Moscow built its closed system precisely to bypass this: since 2021, the share of shadow tankers in Russian oil shipments has risen from 13 to 47 per cent as of August 2025.
According to the KSE, the shadow fleet enabled Russia to generate about $9.4 billion in additional revenue in 2024 by circumventing the price cap. Since the ships are not directly linked to Moscow, the cap cannot technically be applied, allowing the sale of crude at prices above the $60 threshold. Russia’s exporters were averaging around $65 per barrel. Despite the broader sanctions regime imposed by the EU, the US, and the G7, Moscow’s oil revenues in 2024 increased by approximately 5% from 2023, reaching roughly $16.4 billion.
There are signs, though, that the tide is turning slowly. By the end of 2025, the share of oil and gas revenues in Russia’s federal budget fell to 23 per cent, the lowest in two decades, with revenues declining from $146 billion in 2024 to $111.2 billion in 2025. The Centre for Research on Energy and Clean Air (CREA) found Russia’s total fossil-fuel revenues down 27% from pre-invasion levels, to €193 billion, with a 19% year-on-year decrease in 2025.
Foreign direct investment (FDI), which was previously the main driver of globalisation, has also taken a different form, with UNCTAD registering a 12% decline in global FDI flows in 2024 and a modest 3% rebound in 2025. Almost 60% of new investments in 2026 are now targeted towards friendly or allied countries, a significant increase from around 40% in 2016. The European Union, in one instance, has invested more than 43 billion in its Chips Act to localise semiconductor manufacturing, whereas the US CHIPS and Science Act invests 52 billion in the US. They are not indications of free international capital flows; they are evidence, supported by information, of strategic economic insulation.
