Oil price cap violations and newly sanctioned vessels

In the past few months U.S. regulators have placed a number of vessels and their owners onto sanction watch-lists as a response to the trading and shipment of Russian oil above the G7 price cap.

As of early December 2023, the U.S. has added 8 to the list covering individual vessels and their registered owners. The majority, 6 in total, have clear associations with the Russian Sovcomflot fleet.

The first vessels sanctioned were the Kazan, Ligovsky Prospect and NS Century who were stated to be involved in the export of Russian crude oil priced above $60 per barrel. All three had registered owners based in the UAE but have subsequently moved to an ownership structure domiciled in Liberia. The next round of vessels included the SCF Primorye and the YasaGolden Bosphorus, the former with a registered owner in the UAE and the latter Turkey based. The Primorye was Russian affiliated but the Golden Bosphorus was part of a large group owned fleet managed out of Turkey without clear Russian ownership or nationality links. The ship had visited Russian ports on multiple occasions.

The latest vessels added to the SDN list occurred on December 1, and included the NS Champion, Viktor Bakaev, and HS Atlantica. Again, registered owners were located in the UAE but both the Viktor Bakaev and the NS Champion were linked at the group level to Sovcomflot. The HS Atlantica has a more interesting form as its group owner is not fully known, marking it as a potential ghost or shadow fleet vessel and the first of this type to be sanctioned as part of the price cap regulations.

For these 8 ships there are clear patterns as to their make-up and structure:

• Largely based and registered in the UAE
• Newly established firms in 2022-23
• Single ship registered owner fleets, a method commonly used to obscure corporate entities and their true owners
• Flags of convenience
• Often recent vessel purchases

As of the December 7, the UK government decided to sanction vessel owners but rather than the registered owner they have targeted the ship manager. Four firms were sanctioned; Oil Tankers (SCF) Management, a subsidiary of Russian-controlled Sovcomflot, K&O Shipmanagement FZE, Radiating World Shipping Services LLC and Star Voyages Shipping. Oil Tankers (SCF) Management is the ship manager for many tankers owned by Sovcomflot who previously managed the fleet out of Cyprus and then Dubai.

K&O Shipmanagement is a relatively new firm founded in 2022 in the UAE. The firm operates under a known group owner and has a number of relationships and subsidiaries associated with it, mainly based out of Hong Kong. Other UAE firms share its address, suggesting the vessels once within its fleet are still operating. The group owner domiciled in the UAE has 12 vessels under management, primarily crude oil or bulk carriers. These vessels mostly have Russian port calls and STS transfers with Russian owned or flagged ships.

Radiating World Shipping Services has been mentioned as a ghost or shadow fleet operator. It has 10 vessels in the fleet, with an eleventh ship recently moving to a new firm in November 2023. This new firm has an unknown group ownership structure and has an operator and registered owner established in 2023. This registered owner will be unknown to many and is following a familiar pattern when vessels are placed under the regulatory or media spotlight for possible sanctions evasion, often fragmenting into different companies, new nationalities and single ship fleets when under scrutiny.

Star Voyages Shipping is a firm established in 2023, registered in the UAE. It has a smaller fleet of 6 ships with many purchased between 2022-23. Flag states for the newly sanctioned firms are spread throughout Panama and Cook Islands.

All actions by the U.S. and UK regulator, in respect to vessel designations, are a strong indication that more vessels and their respective owners will be made public in the near future. All eyes are now on the European Union and its imminent 12th Package of Russian trade sanctions.

Subscribe to our complimentary Global Risk & Maritime quarterly newsletter, or listen to Maritime and Trade Talk podcast for the latest insight and opinion on trends shaping the shipping industry from trusted shipping experts.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.