As Europe pushes through its nineteenth round of sanctions on Moscow, a growing fleet of ageing oil tankers continues to slip through regulatory cracks, reshaping marine risk in ways that could endure long after the war in Ukraine ends.
Russia has relied on a “shadow fleet” of vessels to circumvent Western restrictions on its crude exports. According to S&P Global Market Intelligence, such ships now account for roughly 17 per cent of the global tanker fleet — some 940 vessels as of early 2025, up 45 per cent in a year. The average age of these tankers is around 20 years, well beyond industry norms, compounding fears of catastrophic loss.
“Lack of insurance combined with the really old vessels — this just increases the risk of environmental catastrophe,” said Natalia Gozak of Greenpeace Ukraine to the New York Times.
Ian Ralby of I.R. Consilium was blunter: “The sanctions don’t put them out of business. They put them out of legitimate business,” he told the paper.
The proliferation of uninsured or dubiously insured ships raises acute exposure concerns. Allianz’s Safety and Shipping Review 2025 noted that shadow vessels operate under flags of convenience, switch registrations to avoid sanctions, and frequently sail without liability coverage. If one of these ships were to spill oil, the financial burden could fall on port authorities, neighbouring cargo owners, or even rival operators caught up in an accident.
The collision in June between the Antigua- and Barbuda-flagged Adalynn and the Front Eagle, a vessel operated by Frontline PLC, underscored the stakes. All crew were rescued, but both ships burned. Reporting in Insurance Businessnoted that the Adalynn may have been part of the shadow fleet, and Allianz has estimated cleanup costs for such an incident could run to $1.6 billion.
Beyond environmental exposure, shadow fleet incidents are colliding with already elevated geopolitical risks. The accident near Khor Fakkan occurred within reach of the Strait of Hormuz, through which one-fifth of the world’s petroleum liquids flow. “Shipping routes like the Strait of Hormuz and the Red Sea are now operational minefields,” said Capt Rahul Khanna, Allianz’s global head of marine risk consulting.
War risk premiums for tankers transiting high-risk zones are climbing, reflecting not only conflicts in Ukraine and the Middle East but also the rising frequency of shadow fleet casualties. Justus Heinrich of Allianz observed that “multiple geopolitical conflicts could overwhelm the war insurance market.”
Western governments are attempting to counter the phenomenon by blacklisting ships. The European Union has added more than 500 vessels to its sanctions list, while the United States, Britain, Canada and Australia have introduced their own measures. Yet Russia continues to replenish its fleet. David O’Sullivan, the EU sanctions envoy, likened the effort to “Whac-A-Mole”, telling the New York Times: “Circumvention is a bit like that.”
The U.S. Government Accountability Office recently concluded that the shadow fleet had “limited the cap’s efficacy,” ensuring that revenues keep flowing into Moscow. Ben Harris, a former Treasury official and architect of the price cap, defended the approach, saying: “Enforcement is the real challenge.”
For marine insurers and reinsurers, the spread of the shadow fleet represents a multi-layered challenge: opaque ownership, flag-hopping, and the near-certainty that any major casualty will land outside conventional claims channels. The S&P Global report warns that the growth of an unregulated shipping economy risks institutionalising a parallel market for oil transport — one that could persist beyond current sanctions.
For the Lloyd’s and company markets, the combination of ageing tankers, fragile chokepoints, and opaque liability means reassessing exposure is no longer optional. Insurers are already narrowing coverage, raising war risk premiums, and introducing new exclusion clauses.
The shadow fleet, once dismissed as a temporary workaround, is now a permanent fixture in global trade. For the insurance industry, its expansion is less a curiosity than a systemic risk.
