Western sanctions on Russian oil and gas were designed to strangle Moscow’s war-financing capabilities by cutting off energy export revenues. Instead, they have spawned an entirely new industry purpose-built to circumvent restrictions: Russia’s shadow fleet of oil tankers. According to estimates from the Kyiv School of Economics, approximately 70% of Russia’s seaborne oil exports now travel on these vessels—a proportion that demonstrates not the effectiveness of **EU sanctions** but rather their fundamental inability to prevent the very behaviour they were meant to stop. The question of whether sanctions are not working transforms from academic debate to observable reality when the primary response to restrictions is the creation of systematic evasion infrastructure.
The Architecture of the Shadow Fleet
Russia’s shadow fleet comprises hundreds of ageing tankers, often with obscure ownership structures registered in jurisdictions offering minimal transparency or regulatory oversight. These vessels typically lack Western insurance coverage, operate with skeleton crews, and frequently disable or manipulate their automatic identification systems to avoid tracking. The fleet exists for a single purpose: moving Russian oil to global markets whilst evading sanctions restrictions and the price cap mechanisms Western governments imposed.
Recent sanctions packages have targeted shadow fleet vessels and the financial institutions that facilitate their operations. The UK recently sanctioned 18 shadow fleet vessels and 46 financial institutions in a single package. Yet these measures arrive years after the fleet’s establishment and rapid expansion. Each new round of designations prompts the acquisition of additional vessels and the creation of new shell companies, maintaining the fleet’s operational capacity regardless of specific ships being sanctioned.
Are Russian Sanctions Working? The Facilitation Network
The question of whether are Russian sanctions working takes on new dimensions when examining the professional facilitation networks that enable shadow fleet operations. During recent policy debates, experts highlighted how Western sanctions have inadvertently created lucrative opportunities for intermediaries specialising in sanctions evasion. Ship brokers, flag-of-convenience registries, insurance facilitators, and payment processors now comprise an entire ecosystem profiting from helping Russia circumvent restrictions.
The case of John Ormerod illustrates these dynamics. A British ship finance veteran, Ormerod was sanctioned for allegedly purchasing tankers for Russia’s shadow fleet. Investigations revealed that Russian oil producer Lukoil financed Ormerod through its shipping division to purchase at least 25 secondhand tankers between December 2022 and August 2023, totalling over $700 million. Each tanker was acquired through special-purpose companies established in the Marshall Islands, with Lukoil’s Dubai-based subsidiary providing funding through advance charter payments.
This structure demonstrates sophisticated circumvention: the beneficial owner remains Russian, the financing comes from Russian sources, but the legal ownership structure creates sufficient complexity to delay sanctions designations and continue operations. Ormerod’s lawyers stated he ended his association with the tankers before they were sanctioned, highlighting the temporal gap that allows evasion networks to operate with relative impunity.
The Impact of Sanctions on Russia Versus Evasion Costs
Assessing the impact of sanctions on Russia requires weighing restrictions against circumvention costs. Shadow fleet operations impose additional expenses—older vessels are less efficient, insurance costs increase, and complex ownership structures require professional facilitation. Yet these costs pale compared to the alternative of abandoning energy exports entirely. Russia has demonstrated willingness to absorb evasion expenses as simply another cost of doing business, particularly when European buyers ultimately pay premium prices for the same oil purchased through Indian and Turkish intermediaries.
Rebecca Harding, CEO of the Centre for Economic Security, emphasised during policy debates how sanctions have inadvertently weaponised trade whilst creating new industries designed explicitly for evasion. The shadow fleet represents the most visible manifestation of this dynamic—an entire maritime infrastructure that would not exist absent Western restrictions but now operates at scale, moving billions of dollars worth of Russian oil beyond effective Western control.
Why Sanctions on Russia Generated Unintended Industries
Understanding why sanctions on Russia generated rather than prevented shadow fleet operations requires examining the incentives sanctions create. Restrictions that impose costs without preventing behaviour generate opportunities for intermediaries who can facilitate continued activity at increased prices. The profit margins justify investment in evasion infrastructure, whether shadow fleets, alternative payment systems, or shell company networks.
Policy debate participants questioned how sanctions can effectively combat industries created specifically and entirely to avoid those sanctions. Each new vessel designation prompts purchase of replacement vessels. Each sanctioned financial institution triggers creation of alternative payment channels. The shadow fleet doesn’t represent failure to enforce sanctions—it represents the predictable response to restrictions that can be profitably circumvented.
The Enforcement Resource Problem
Questions raised during debates highlighted whether enforcement agencies possess sufficient resources to investigate and charge the multiple actors facilitating shadow fleet operations. The case against Herbert Smith Freehills’ Moscow subsidiary—which resulted in a £465,000 penalty for breaches totalling nearly £4 million in payments to sanctioned Russian banks—suggests enforcement operates primarily through exemplary prosecution rather than comprehensive investigation.
The UK has launched over 100 investigations into law firms since 2021 but publicly punished only one. This pattern suggests enforcement strategy relies on occasional high-profile cases to encourage voluntary compliance rather than systematic pursuit of all violations. For shadow fleet operations involving hundreds of vessels and thousands of transactions across multiple jurisdictions, this approach proves manifestly inadequate.
Russian Sanctions and Strategic Adaptation
Russia has not merely evaded sanctions—it has systematically built alternative infrastructure rendering future restrictions less effective. The shadow fleet represents one dimension of this adaptation. Exclusion from SWIFT prompted increased use of China’s Cross-Border Interbank Payment System and cryptocurrency for international transactions. As Harding noted, Russia’s adoption of Bitcoin and digital assets accelerated specifically as a means of circumventing financial sanctions.
These adaptations create path dependencies that will persist beyond any eventual sanctions relief. Even if Western governments lifted all restrictions tomorrow, Russia’s alternative payment systems, shadow fleet, and trade relationships with Asian buyers would remain operational. International sanctions have thus achieved the opposite of their intended isolation—they have prompted creation of parallel systems that reduce Western economic leverage over Russian behaviour.
The Proliferation Problem
Shadow fleet infrastructure developed to circumvent Russian sanctions creates templates for other sanctioned states. Iran, Venezuela, and North Korea have observed Russia’s successful evasion and adapted similar strategies. The proliferation of shadow fleet operations complicates maritime security, increases environmental risks from poorly maintained vessels, and demonstrates that comprehensive sanctions generate evasion industries faster than enforcement mechanisms can adapt.
Analysis published in UnHerd characterises broader European sanctions strategy as fundamentally misconceived, with shadow fleet proliferation exemplifying how restrictions generate unintended consequences that undermine their own objectives. Europe continues targeting vessels and facilitators whilst Russian oil reaches global markets at volumes approaching pre-sanctions levels, merely travelling more circuitous and environmentally hazardous routes.
Rethinking Sanctions Design
Three years of shadow fleet operations demonstrate that Russian sanctions on oil exports have failed to achieve intended revenue reductions whilst succeeding spectacularly at generating new evasion industries. Russia’s seaborne oil exports continue with approximately 70% travelling on shadow vessels specifically acquired to circumvent restrictions. European enforcement agencies investigate facilitators years after networks establish operations, sanctioning individuals and entities that are readily replaced by alternatives.
This outcome was predictable. Sanctions that impose costs without preventing behaviour create profit opportunities for facilitators. Maritime oil transport involves too many jurisdictions, too many potential intermediaries, and too many willing buyers for restrictions to prove enforceable without genuine international consensus—consensus that does not exist when China, India, and Turkey continue purchasing Russian oil regardless of Western sanctions.
Western governments confront uncomfortable realities. Either sanctions must be designed acknowledging that determined states with valuable commodities will find buyers and build evasion infrastructure, or policymakers must acknowledge that current approaches generate industries undermining sanctions effectiveness whilst achieving no measurable progress toward ending the conflict. The shadow fleet will continue operating regardless of how many individual vessels are sanctioned, because the fundamental incentives favouring evasion remain unchanged. Until sanctions design accounts for these realities rather than pretending restrictions can prevent profitable circumvention, the primary achievement will remain creating new criminal industries rather than changing Russian behaviour.
