The so-called dark activity, where ship transponders are turned off for hours at a time, has long been considered by US officials as a deceptive shipping practice often used to circumvent sanctions. Dark activity among Russian crude oil tankers is up 600 percent from before the start of the war, Windward told CNN. “We are seeing a surge in Russian tankers deliberately shutting down transmissions to circumvent sanctions,” Windward CEO Ami Daniel said in an interview. “The Russian fleet is starting to hide where it is and its exports.” And this is not just the case with crude oil. Similar trends occur with other petroleum products. During the week of March 12, there were 33 incidents of dark activity by Russian petrochemical and petroleum tankers, according to Windward, which uses artificial intelligence to monitor the shipping industry. This is 236% higher than the weekly average of the previous 12 months.
“These boats want to disappear”
International regulations require ships such as oil tankers to have their transponders on almost all the time. In May 2020, the US Treasury Department sent a sanction advisory to the shipping, energy and metal industries to tackle “illegal shipping and tax evasion practices”. The first example recorded was the “deactivation or operation” of automatic identification systems (AIS) on ships to “cover their movement”. “The manipulation and interruption of the AIS could indicate possible illegal or dangerous activities,” the finance ministry warned. Ships can also darken for safety reasons, including when traveling in waters contaminated by pirates. But Daniel, Windward’s chief executive, said that was not why the ships were getting dark now. “These boats want to disappear from radar. In terms of compliance, it’s a red flag,” he said. In a statement to CNN, a Treasury Department spokesman said the agency was “aware of these reports” and was working with partners through a “variety of methods” rather than relying solely on transponder emissions to track interest vessels.
Taking a page from the book of Iran
Similar behavior has been observed over the past decade, when the United States imposed sanctions on Venezuela and Iran, making the purchase of oil from those countries illegal. “Russia is following the book of Venezuela and Iran with a slight twist,” said Andy Lipou, president of the consulting firm Lipow Oil Associates. The upside is that, unlike Venezuela and Iran, the West has not imposed sanctions directly on Russian oil. Yes, the White House has banned Russian oil imports to the United States. But that does not stop other countries from buying Russian energy.
“Disaster in public relations”
However, the mere stigma of doing business with Russia, along with the uncertainty of sanctions, has created a de facto embargo. Analysts say this explains the sharp rise in dark activity among Russian-flagged ships. Buyers do not want to be fooled by the fact that they are collecting Russian oil during the deadly war in Ukraine. “It’s a public relations disaster,” said Robert Yawger, vice president of futures at Mizuho Securities. Likewise, shipping companies may want to avoid the control that comes from handling Russian crude. “The ships are getting dark because they are afraid that if they take over Russian companies, they will be blacklisted for some time and will not be able to do future work,” Lipou said. And yet there is an economic reason to buy Russian oil right now. Demand for energy is very high and – largely due to sanctions – Russian crude is trading at about $ 30 cheaper than Brent crude, the world benchmark. “You get a big discount,” said Michael Tran, chief executive of global energy strategy at RBC Capital Markets. “The financial incentive is there, if you are not worried about sanctions.”
Where does the oil go?
Research firm Rystad Energy estimates that between 1.2 and 1.5 million barrels per day of Russian crude oil exports have disappeared in the five weeks since the start of the war. “The destination of the remaining crude exports from Russia … is increasingly ‘unknown,’” Rystad Energy wrote in a report this week, noting that this mysterious oil totals about 4.5 million barrels a day. . So who buys Russian oil? Analysts say there is evidence that refineries in China and India, two of the world’s largest consumers of oil and the fastest-growing economies, are secretly buying Russian energy. Tran said the companies could buy Russian oil and put the barrels in storage, including “floating storage” on tankers that remain at sea. In addition to the shady activity, Windward found that some ships and companies continue to trade with Russian tankers and engage in ship-to-ship transports. In 2020, the Treasury Department warned that ship-to-ship transports, especially at night or in areas considered high risk to avoid sanctions, “are often used to avoid sanctions by concealing the origin or destination” of oil, coal and other material. Despite the war in Ukraine and sanctions on Russia, the number of ship-to-ship encounters that lasted at least three hours between Russian oil tankers and other ships is “relatively normal,” Windward said.
