Sanctioned oil trade is booming in the shadows, to India's and China’s benefit

Used to transport oil by countries under Western sanctions such as Russia, Iran and Venezuela, the size of this fleet has grown manifold and now accounts for an estimated 18.5% of global tanker capacity, according to S&P Global.

It’s called a shadow fleet because it uses various methods to evade detection by sanctions-enforcement agencies, such as frequently changing the name of the ship and its flag (the country where it is registered), and turning off its transponder to make it invisible to GPS satellites.

Through the roof

The shadow fleet came into its own following the Russia-Ukraine war that began in 2022 as the West imposed sanctions on oil transport by Russia. To evade these sanctions, Russia developed a ‘shadow’ or ‘dark’ fleet of oil tankers, which adopted various methods to conceal their ownership and the origin of the oil they were transporting. According to Kpler, a maritime analytics and intelligence firm, the size of the shadow fleet grew from just 97 vessels in 2022 to around 3,313 vessels by the end of 2025, an increase of 3,315%.

In 2025 this shadow fleet moved about $100 billion of crude oil, accounting for 6-7% of global oil flows. “What began as isolated compliance breaches has become a structural layer of global trade in 2025, with obfuscation now functioning as a new operating model rather than an anomaly," said Kpler. Tankers in the shadow fleet tend to be much older than normal cargo ships. They are often uninsured and have extremely opaque ownership structures to evade detection.

Russian dominance

‘Shadow fleet’ is an umbrella term with two sub-parts. The first is the ‘dark fleet’, which is the subject of US or EU sanctions. The second is the ‘grey fleet’, which is not subject to sanctions yet but is suspected by analytic firms and investigative agencies of moving cargo from and to sanctioned countries.

Kpler's shadow fleet estimate of 3,313 vessels covers the subset of ships with a deadweight tonnage (total weight-carrying capacity of a ship excluding its own weight) of above 5,000 tonnes. Ownership data of the shadow fleet is compiled by S&P Global, but this is only for tankers with a deadweight tonnage of above 27,000 tonnes. Russia accounts for more than half the tankers in this S&P list.

Another substantial chunk of tankers on this list is of flexible or indeterminate ownership. “Controlled by shadowy shipping magnates, the [flexible] fleet has undergone rapid expansion in recent quarters and often been used for offshore oil transfers off Malaysia," said S&P Global.

Key exporters

The global shadow fleet grew at the initiative of Russia in its attempts to evade sanctions on global oil shipments. According to Kpler, Russia accounted for 63 million barrels of the 299 million barrels of crude shipped by the shadow fleet in November 2025. Interestingly, other key exporters of sanctioned crude include Saudi Arabia and the US.

According to Kpler, in 2025, 686 vessels and 196 companies were placed under sanctions for transporting crude oil illicitly. Regulators have focused on opaque shipping networks in high-risk regions such as the Eastern Mediterranean, Gulf of Oman, Black Sea, and transshipment hubs tied to Russian crude and LNG flows.

Yet, the shadow fleet has continued to grow. According to Kpler, the shadow fleet is not only larger but more operationally robust, supported by an ecosystem of opaque ownership, permissive jurisdictions, and parallel service providers that collectively harden the network against enforcement pressure. “Regulatory friction is met with operational creativity: when one corridor closes, two alternative routes appear," it added.

Key importers

While Russia and Iran are the major sanctioned sellers of crude oil in the global market, India and China are the major buyers of sanctioned crude. For the last three months of 2025, India and China accounted for roughly a fifth of imports of crude using the shadow fleet, as per Kpler.

S&P has traced some of these movements. China, for instance, is the largest buyer of Iranian oil. It finds its way to China via an opaque process by which ships carrying Iranian crude offload their cargo to a second set of ships in Southeast Asian waters, which then head to Chinese ports.

Given the opacity of the trade and the evasion tactics followed, it is unlikely that 2026 will see any dramatic changes to the shadow fleet. This is especially because China is the epicentre of such demand, and sanctions on Russia and Iran are likely to continue. The shadow fleet might still see a reduction in absolute numbers as sanctions on Venezuela are lifted.

Indian basket

India is also a key importer of shadow fleet crude. In 2024, Kpler estimated that 9.5% of crude oil flows from Russia to India were made using the shadow fleet. Following the US tariffs in April, India has noticeably reduced its imports of Russian crude, at least if official numbers are to be believed. Russia’s share of India’s crude imports declined from a high of 45% in July 2024 to 32% in December 2025.

Further, according to Kpler, “New EU-27 measures taking effect [in 2026] will tighten restrictions on fuels produced from Russian-origin crude, putting a significant share of Indian refined product exports to Europe at risk."

This decline in Russian crude imports into India is unlikely to be reversed, at least if India wants to avoid further heavy tariffs from the US, but it is unlikely to go to zero either. According to a Bloomberg report, Indian oil refiners have been buying more crude from Middle Eastern sources, and have trimmed their purchases from Russia.

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