Maritime shadow fleet − Formation, operation and continuing risk for sanctions compliance teams in 2025

An increasing focus in 2025 on Iranian oil cargoes exported to the Far East by shadow fleet vessels has received extensive attention by US authorities and has resulted in a “maximum pressure” approach to reduce these exports to zero¹. The recent sanctioning of Chinese "teapots," (small, independent refiners) such as Shandong Shouguang Luqing Petrochemical Co. Ltd.², for purchasing Iranian oil is a significant escalation by the US in seeking to choke Iranian oil at the refining stage and not just at sea. Further action on Iran and the shadow fleet servicing its oil shipments are likely to continue.

The shadow fleet, therefore, remains an important topic for consideration in 2025, especially for those undertaking vessel compliance. Not knowing the group owner of a vessel or fleet of vessels poses a degree of risk. Equally, the ability to determine the origin of oil and to understand restrictions on Russian oil entering an EU port, either directly or via a ship-to-ship (STS) operation, are requirements placed on maritime-associated firms. The need to identify the shadow fleet and be aware of its actions are hugely important when a Russian nexus to a vessel or firm is no longer obvious.

Market Intelligence and Commodity Insights have attributed three tiers to the shadow fleet analysis. These three tiers are determined to ease identifying ships in the fleet recently designated; how deeply they are embedded into sanctions evasion activity; the ships hidden from view by ownership; and those lifting Russian, Iranian and Venezuelan cargoes.

Tier 1 constitutes the highest risk involved in Russian, Iranian and Venezuelan trade and Tier 3 the lowest with its emphasis on the movement of Russian, Iranian and Venezuelan oil via STS and port calls. A fourth tier covers the tanker fleet, which does not engage in the shipment or trade of shadow fleet oil.

• Tier 1 includes ships designated for sanctions evasion or that have been attributed a severe status owing to a relationship with Russia, Iran or Venezuela. Many of these vessels or their owners have been added to the OFAC SDN list and other sanction authority watchlists, including the UK Foreign, Commonwealth & Development Office, the UN, the EU and Switzerland.
• Tier 2 comprises vessels with opaque ownership; previous Russian, Iranian and Venezuelan nationality or registration; and are more likely to be involved in sanctioned business activity or vessels in a fleet where the majority of ships are sanctioned.
• Tier 3 covers ships that have more legitimate owners and established by shipping firms setup pre-2022. A Russian, Iranian or Venezuelan nexus is also not identifiable prior to 2022. These vessels are engaged in Russian port calls and STS activity after Dec. 5, 2022, for example.
• Tier 4 covers tankers engaged in mainstream business where no registration or control can be linked to the shadow fleet or hauling oil cargoes related to Russia, Iran or Venezuela. These ships do not lift such cargo via port call or STS. Again, the definition of these ships includes in-service vessels that are equal to or more than 27,000 dwt.

Components of the shadow fleet

Research by Market Intelligence and Commodity Insights has identified 3,154 individual ships involved in the transportation of Russian oil since Dec. 5, 2022. This number constitutes 48% of the global in-service oil and products tanker fleet that is equal to or more than 27,000 dwt.

Additionally, a shadow fleet, made up of tankers in Tier 1 and Tier 2, accounts for 17% of the global in-service oil and products tanker fleet. This fleet numbers 940 unique ships, up 45% since previous estimates were calculated by Market Intelligence in May 2024. The significant rise in this number can be explained by the introduction of new sanctions measures and designations by the US Treasury Department in 2024, the sale of tankers by Greek owners to Russian entities and new owners establishing themselves within the Russian shadow fleet often based in India and the UAE.

One of the key attributes to the shadow fleet has been the age of a vessel. It is frequently noted that the shadow fleet comprises mainly older tankers and analysis highlights a large number of ships older than 18 years. 

Tier 1 and  Tier 2 shadow fleets, age

The average age of a shadow fleet ship is 20 years; 567 vessels in the shadow fleet, 60% of the total, are 20 years or older.

The medium range 2 (MR2) tanker type (50,000 dwt) makes up the largest class of vessel within the shadow fleet with Aframax-class vessels (100,000 dwt) also contributing significant numbers to the overall composition. 

Tier 1 and  Tier 2 shadow fleets, flag

Sanctions escalation against Russia

As the conflict reaches its third year, sanctions have continued to escalate in different ways. Governments, supranational blocks and organizations have been involved in rolling out sanctions against Russia, with the most active being the UK, the US and the EU. From assets, individuals, entities, export controls and more, various measures have been put into place, which have increased the scope required to operate a robust diligence process.

So far this year:

• The US implemented additional sanctions in January to further disrupt Russia’s oil production and export³ by focusing on oil majors as well as vessels and entities that operate in this sector. Additional sanctions have been implemented against Iran’s Shadow Fleet to minimize funding toward nuclear weapons.
• The European Commission released its 16th package of sanctions in February⁴ to further restrict the Russian economy, including energy, trade, transport, infrastructure and financial services, as well as an emphasis on anti-circumvention measures. Detailed explanations of EU sanctions against Russia were also updated on March 19, 2025⁵.
• The UK released the largest sanctions package against Russia since 2022⁶ in February, inclusive of 107 new sanctions targeting the Russian energy and trade sectors, as well as parties supporting Russia's war efforts, including North Korean military officials and foreign financial institutions, to disrupt the war efforts, with wider description of efforts detailed on the UK Government Response page.⁷

Market Intelligence have been closely tracking sanctions issued against the Russian government, Russian companies and individuals since the invasion of Ukraine began, highlighting the continuous month-on-month issuance since February 2022.

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[1] See US Department of the Treasury, "Treasury Secretary Scott Bessent remarks at FinCEN Iran Maximum Pressure and Counter Terrorism (IMPACT) Exchange Series, April 2, 2025," https://home.treasury.gov/news/press-releases/sb0069.

[2] US Department of State, "Sanctioning entities purchasing and transporting Iranian oil to further impose maximum pressure on Iran, March 20, 2025," https://www.state.gov/sanctioning-entities-purchasing-and-transporting-iranian-oil-to-further-impose-maximum-pressure-on-iran/.

[3] See US Department of Treasury, "Treasury intensifies sanctions against Russia by targeting Russia’s oil production and exports, Jan. 10, 2025," https://home.treasury.gov/news/press-releases/jy2777.

[4] See Council of the European Union, "16th package of sanctions on Russia’s war of aggression against Ukraine: EU lists additional 48 individuals and 35 entities, Feb. 24, 2025," https://www.consilium.europa.eu/en/press/press-releases/2025/02/24/16th-package-of-sanctions-on-russia-s-war-of-aggression-against-ukraine-eu-lists-additional-48-individuals-and-35-entities/.

[5] See Council of the European Union," https://www.consilium.europa.eu/en/policies/sanctions-against-russia-explained/#sanctions.

[6] See GOV.UK, "UK announces largest sanctions package against Russia since 2022, Feb.24, 2025," https://www.gov.uk/government/news/uk-announces-largest-sanctions-package-against-russia-since-2022.

[7] See GOV.UK, "Russian invasion of Ukraine: UK government response," https://www.gov.uk/government/topical-events/russian-invasion-of-ukraine-uk-government-response