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industry stakeholders can reduce their exposure to possible risks associated with recent
developments in the maritime oil trade.
Increased Risks from Recent Developments in the Maritime Oil Trade
Geopolitical changes continue to impact and shape the world’s maritime oil trade, shifting trade
routes, broadening the scope of shipping service providers, and, at times, resulting in loss of
transparency. A “shadow” trade has become more pronounced, often involving actors and cargo
affiliated with countries and persons subject to sanctions, or associated with other illicit activity.
This shadow trade is characterized by irregular and often high-risk shipping practices that generate
significant concerns for both the public and private sectors. These heightened risks include, but
are not limited to:
• Maritime Safety and Marine Environment: The vessels engaged in this shadow trade,
sometimes called the “shadow fleet,” are typically older ships, many of which are operating
past their traditional lifespans. These vessels are often registered with flag states that fail to
meet their international obligations. There is also an increased risk of falsified registration.
Vessels in the shadow trade may fabricate or neglect the appropriate surveys or inspections and
lack regulatory certificates required under international conventions. Additionally, crews
employed on shadow fleet vessels may face pressure to disregard prudent shipboard practices,
including those provided by the International Convention on Standards of Training,
Certification and Watchkeeping for Seafarers (“STCW”). These factors (i.e., vessel age;
substandard certifications; inadequate safety and maintenance standards performed by
substandard flags or unrecognized organizations; imprudence by crew) could increase the
likelihood of marine casualties.
• Insurance and Economic: Oil spills can create tremendous environmental damage and impose
immense economic costs on coastal states. Ships involved in the shadow trade may rely on
unproven Protection and Indemnity (P&I) insurance providers that operate in jurisdictions with
opaque or limited regulation, and insufficient capital, reinsurance arrangements, and/or
technical expertise to handle a major claim in the event of a marine casualty. Accordingly, it is
more challenging to hold such vessels accountable for the heavy economic burden generated
by environmental damage.
• Reputational, Logistical, and Financial: Actors involved in the shadow trade often conceal
their ownership structures and the origin of their cargo. The ownership of shadow fleet tankers
may be concealed through complex corporate arrangements, with a recent increase of single
vessel fleets. These vessels may disable or manipulate AIS systems to conceal illicit activity
or other information about their voyages. Such deceptive practices may cause industry
stakeholders to unknowingly engage in transactions that are inconsistent with industry
stakeholders’ compliance policies, affect industry stakeholders’ reputations, and trigger de-
risking behavior from counterparties. This de-risking can result in loss of access to reputable
service providers, financing, customers, and ports.
• Legal and Sanctions: A coalition of over thirty countries have adopted a variety of economic
measures in response to Russia’s war against Ukraine, including the oil price cap policy
implemented by the Price Cap Coalition. Bad actors may use deceptive practices to gain or
maintain access to Price Cap Coalition services to transport Russian oil or petroleum products