ADVANCING the Kremlin’s economic ends can make private companies a lot of money. But like so many with an underground fanbase, eventually everyone sells out and goes mainstream.

Luckily for the tanker operators that sustain Russia’s energy exports in the face of Western efforts to punish the illegal invasion of Ukraine, there appears to be little stopping them from coming back in from the cold.

Russian crude is selling just a couple of dollars short of $80 a barrel, with the ostensible $60 a barrel price cap left high and dry.

Western operators mindful of legality have no alternative but to say ‘nyet’ to any Russia bookings, leaving the dark fleet* — which now numbers around 476 vessels — the only game in town.

The identities of its ultimate owners are well hidden behind several layers of corporate veil. But somebody, somewhere will have put up the cash necessary to acquire what amounts to about 10% of the world tanker fleet.

The rewards for those willing to carry sanctioned Russian crude correlates positively with their willingness to ignore strictures imposed by the US and the EU.

Such operators claim they are working to shore up energy security, rather than creating a fleet of rusting tankers of dubious operational standards to sustain Russia’s energy exports in the face of international condemnation and sanctions seeking to curtail the military activity.  

Many have engaged in suspicious ship-to-ship transfers that give every appearance of further attempts to circumvent the restrictions.

But the signs are that the market is not holding a grudge against vessels that legitimately accepted bookings within the terms of the price cap and now seek alternative employment, as chief executive Lars Barstad noted in Frontline’s second-quarter outlook this week.

There appears to be little resistance to charterers hiring them “so long as [they] do not [have] any kind of shady ship-to-ship transfer history in their papers or have activity that cannot be explained”.

Those that have made a name for themselves as Putin’s tanker owners of choice may not find the leap into the mainstream trades easy to make, and charterers will understandably be nervous about reputational risk involved.

But the return of dark fleet ships to other trades complicates counterparty risk for the rest of the market, besides making its future earnings harder to predict. 

Ultimately, the dark fleet represents too big a proportion of the world tanker fleet to simply write off. Any reckoning in relation to accusations of helping Russia may only happen when the war is over, if it happens at all.

But shipping has to deal with the reality today. This makes scrutiny of trading ships’ history more important than ever. Whatever happens next, there is going to be an increased need for accurate and objective risk and compliance analysis.

The dark fleet may be coming out of the shadows, but the cloud it casts over the rest of the industry is not going anywhere.

*Lloyd’s List defines a tanker as part of the dark fleet if it is aged 15 years or over, anonymously owned and/or has a corporate structure designed to obfuscate beneficial ownership discovery, solely deployed in sanctioned oil trades, and engaged in one or more of the deceptive shipping practices outlined by US State Department guidance issued in May 2020. The figures exclude tankers tracked to government-controlled shipping entities such as Russia’s Sovcomflot, or Iran’s National Iranian Tanker Co, and those already sanctioned. Download our explainer on the different risk profiles of the dark fleet here

Lloyd’s List Intelligence Seasearcher subscribers can add the Lloyd’s List dark fleet to their watchlists here