In response to Russia's invasion of Ukraine in February 2022, the international community swiftly imposed a range of economic sanctions aimed at restricting the Russian economy and limiting the country's ability to fund its military aggression. Among the most significant of these measures were sanctions targeting Russia's oil sector, a crucial component of the country's economy and a major source of revenue for the Russian government. In particular, the G7 group of nations, along with other EU countries, agreed on a price cap on the sale or purchase of Russian oil and petroleum products.

In an effort to avoid the price cap, and other possible sanctions, Russia has encouraged the creation of its own Shadow Fleet of limited lifecycle companies operating aging tankers, to hide the real trade in Russian oil. While some may be under direct if covert Russian control, many are owned and operated by opportunistic third-party operators, who can make large profits in trading Russian oil. To support this, an array of companies has sprung up to facilitate the trade, while also making it difficult to track activity, and therefore aid in evading sanctions.

The number of little-known trading firms relied on by Moscow to export large volumes of crude exports to Asia has mushroomed in recent months. Sanctions against Russian oil sparked major oil firms and commodity houses to withdraw from business with producers in Russia. As Western companies pulled out of Russian oil markets in the wake of the Russian invasion of Ukraine, this shadowy network of shell companies immediately stepped in to fill the gap.

The Shadow Fleet network is a shift away from the small number of well-established major oil companies that have handled Russian oil products for decades. Shipping data indicates over 40 middlemen and companies with no prior involvement in the oil business, handled Russian oil trading between March and June 2024.

These new companies have quickly become some of the world's biggest oil traders, shipping at least half of Russia's crude oil and refined oil on average in 2024, up to 6-8 million barrels per day, appearing after Russia's illegal invasion of Ukraine in February 2022.

## Bellatrix Energy

Bellatrix Energy is a prime example of a murky Shadow Fleet company. Sharing a name with an evil witch from the Harry Potter world, this company is practicing evil of a much more banal form.

Bellatrix Energy is controlled by Bilal Aliyev, an Azerbaijani who took control in the early weeks of the Russian invasion. According to the US Government, since the middle of June 2023, vessels chartered by Bellatrix have made more than 150 port calls in Russia. Since the invasion of Ukraine, Bellatrix has traded tens of millions of tons of crude oil and other products of Russian state-owned companies, and has received a loan worth hundreds of millions of dollars from a Russian state-owned bank. Bellatrix has also borrowed from the Russian Regional Development Bank, which OFAC (US Office of Foreign Assets Control) designated for sanctions on November 2 2023.

One particular example, shows the sort of methodology used to obscure the trade in Russian oil from detection by concerned authorities. In May 2023, a Liberian-flagged tanker (but actually part of the Shadow Fleet), the 'Leopard I' left Ust-Luga port in Russia, carrying 100,000 tonnes of Russian oil bound for India. The company who had ostensibly brokered the shipment was Bellatrix Energy, but not for long. Halfway on the journey, while still at sea, the oil changed hands. The new owner was now Guron Trading, another Hong Kong based company, and one which has also been identified and sanctioned for its part in obfuscating the trade in Russian oil. The exchange was clearly not a genuine business transaction, just a sleight-of-hand to confuse things. This web of transactions, with ownership changing hands in mid-voyage etc, is typical of the way Russian oil is currently being laundered through a series of shell companies and nominal owners, making it increasingly difficult to track the true origin and destination of the oil, thereby allowing Russia to continue evading sanctions while deceiving the international community about the extent of its oil exports. Bellatrix is just one such dirty company, serving the same dirty function as many others.

### Guron Trading

Guron Trading, based in Hong Kong, now operates the Liberian-flagged 'Leopard I'. The company was founded 12/20/2021, the website was removed in 2024. It is now available and displays little information, just that the company deals in the international oil trade.

## Are the Sanctions Working?

Russia's oil exports fell in 2024 but revenue rose by $3.8 billion hitting $192 billion. Thanks to the Shadow Fleet, Russian oil exports from all sea ports reached a multi-year high in April and May 2024 at nearly 4 million bpd.

In May 2024, Russian oil supplies to India, which was a rare buyer of Russian oil before the invasion of Ukraine, hit a record of 1.95 million bpd while China imported 2.29 million bpd. China and India have become Russia's biggest buyers of oil since sanctions were introduced by Europe and the United States.

Of the largest oil producers, only Lukoil continues to market oil through its trading division, which it relocated to Dubai. The other companies sell to the new trading firms, which are mostly registered in China, Singapore, Hong Kong or Dubai.

According to data, from March to June 2024 the top oil traders who purchased oil from Rosneft, Surgutneftegaz and Gazprom Neft were, Dubai-based Petroruss, Hong Kong-registered Guron Trading, Bellatrix Energy and Covart Energy, Dubai-registered Voliton, Demex Trading, Nestor Trading, Orion Energy and Singapore-headquartered Patera.

Some companies, such as Voliton, had no websites or contact numbers.

These emerging companies have been instrumental in maintaining, and increasing Russia's oil exports by facilitating the redirection of shipments from major crude producers like Rosneft, Lukoil, Surgutneftegaz, and Gazprom Neft to countries such as India and China.

## The Bottom Line

The data reveals a disturbing methodology, where companies with limited lifecycles are deliberately established to circumvent sanctions and facilitate the trade of Russian oil. These opaque entities are strategically set up in jurisdictions with lenient regulatory environments, such as the UAE's DMCC free zone. By leveraging a complex web of intermediaries and proxy companies, the true ownership and beneficiaries of these organizations remain obscured, making it exceedingly difficult to track the origin and destination of oil products. This cleverly designed system enables sanctioned entities to covertly continue trading oil, reaping substantial profits in the process.

The transient nature of these companies, which can quickly be established and dissolved, adds an extra layer of complexity to the already murky landscape. This makes it challenging for authorities to monitor the transfer of oil products and assets, as exemplified by the transfer involving the 'Leopard I' vessel, between Bellatrix Energy and Guron Trading. The use of such shell companies, with their short lifecycles, has become a key tactic in evading sanctions, allowing Russia to maintain a steady flow of revenue from its oil exports.

Ultimately this methodology has significant implications for the ongoing conflict in Ukraine, as it enables Russia to continue funding its aggressive military campaign. The imposition of sanctions was intended to restrict Russia's ability to generate revenue from its oil sales, thereby limiting its capacity to finance its illegal war. However, by exploiting loopholes and using clandestine networks, Russia has been able to evade these sanctions, ensuring a continued influx of funds to support its illegal invasion of Ukraine. As a result, the international community must adapt its strategies to counter these evasion tactics, in order to effectively curb Russia's ability to profit from its oil exports and ultimately bring an end to the conflict in Ukraine.

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How Russia is using limited lifecycle companies to minimize the risk of oil sanctions.

Russia's Secret Strategy for Oil Sanctions Evasion

Despite Western sanctions Russia's illicit oil trade continues to thrive with the Shadow Fleet playing a crucial role in evading the price cap. Sanctions imposed in December 2022 by G7 countries on Russia's oil trade intend to prevent Russia from earning money to fund its illegal war in Ukraine however Western governments report that Russia is operating a dark fleet made up of hundreds of old tankers whose ownership is deliberately obfuscated.

The Kyiv School of Economics estimated that the Shadow Fleet comprises over 400 ships capable of transporting oil allowing Russia to evade the sanctions which cap the price of a barrel at $60, limiting Russia's ability to generate money. The aging tankers are bought by non-transparent entities in countries outside the G7 such as the Marshall Islands or the United Arab Emirates and sail under the flag of countries like the Cook Islands or Gabon. Despite being named 'Shadow Fleet' the ships overtly stop at Russian oil terminals, clearly displaying their activity. Some of the vessels can be linked to Russia as with the ships owned by Sovcomflot. The Shadow Fleet's ability to operate with relative impunity has significant implications for the effectiveness of Western sanctions.

## Sanctions
The cap on oil prices means that companies cannot buy oil priced above the threshold and insurers cannot provide cover for ships involved in these practices. By capping the price of oil, it can still be provided to countries but Russia cannot make large profits on it, avoiding a gasoline crisis that would increase prices globally. The UN International Maritime Organization requires ships to have insurance and audits to ensure their safety. The Kyiv School of Economics reports that before the sanctions most ships were insured by International Group but since the sanctions the number of ships transporting Russian oil and insured by IG has decreased by 60%. To evade this, non-transparent entities in countries that don't adhere to sanctions such as UAE, India, the Seychelles, buy old tankers and insure them through non-Western or Russian insurance companies.

Western countries have sanctioned 270 ships operating in the Shadow Fleet and 183 more vessels have been added to the sanctions list in the last month. It is reported that approximately two-thirds of the ships have become idle, unable to operate which is costing large amounts of money for the entity that owns it ultimately meaning less money for Russia to fund its illegal war.

## Environmental Damage
A tanker carrying over 300,000 barrels of oil from the port of Vysotsk nearly ran aground in the Danish Straits in 2023. Aged 18 years the vessel posed a significant environmental risk as its advanced age made it more susceptible to accidents, potentially leading to severe ecological damage had it run aground. The clean-up would be costly, and due to the sanctions surrounding insurance of these vessels, it is unknown whether the ship's cover would be able to finance the cost. Many European countries now request insurance details from suspected Shadow Fleet ships which can be added to sanctions lists if they do not have correct insurance.

The recent disaster involving Volgoneft 212 and Volgoneft 239 on December 16 2024 further highlights the danger of these aging ships. During a heavy storm Volgoneft 212 split in half and Volgoneft 239 ran aground causing oil to spill in the Kerch Strait, which could be one of the worst ecological disasters the region has seen in years. The ships are over 50 years old and it is clear that they are not maintained to safety standards. As a result, dead birds were filmed on the beaches nearby. Russia's continued operation of aging and damaged ships highlights the country's disregard for environmental protection. Russia's prioritization of oil profits to fund its ongoing conflict, is coming at the expense of both human well-being and the well-being of the environment. This raises questions about the long-term consequences of Russia's actions and the potential for devastating ecological damage.

By operating these aging, damaged ships, Russia continues to carelessly destroy the environment, thinking only about its oil profits to fund its illegal war and not about the well-being of people or the environment.

## Sabotage
On December 25 2024 an undersea power cable and 4 data cables were severed, disrupting the supply of electricity from Estonia to Finland. Finnish police seized an oil tanker registered in the Cook Islands suspected of being part of the Shadow Fleet. It is reported that Eagle S dragged its anchor along the seabed to damage the Estlink 2 cable that supplies electricity to Estonia from Finland. It was only just stopped by Finnish defense forces before it would have hit further critical connections.

The damage to the Estlink 2 cable is the second time vital undersea cables between NATO allies have been damaged in 2 months. In November China-flagged bulk carrier Yi Peng 3 dragged anchor to damage the C-Lion 1 communication cable connecting Finland and Germany. The ship spent over 4 weeks in international waters in the Danish Straits as officials investigated.

This has triggered the Joint Expeditionary Force (JEF), a group of 10 European countries to launch an operation dubbed 'Northern Warden', to begin real-time monitoring and warning dissemination to JEF and NATO countries and allies about possible threats to ensure the safety of undersea infrastructure.

The Shadow Fleet's involvement in such activities underscores the need for increased vigilance and cooperation among Western countries to counter Russia's illicit activities. The Shadow Fleet's sabotage incidents have significant implications for the security of undersea infrastructure and highlights the need for a coordinated response to address these threats.

## Russia's Invasion of Ukraine
Despite the price cap, Kyiv School of Economics estimates that Russia earned an extra $9.4B throughout 2024. Sanctions experts say that the price Russia gets for its oil has increased, and the reduction it sees overall is now less than $10 per barrel, which has allowed Russia's oil profits to steadily increase.

In light of the political distractions and uncertainty in Western states' commitment to Ukraine, Russia will continue its campaign to bomb Ukrainian cities and critical infrastructure into submission. Despite Russia's overall poor economic performance since the beginning of the invasion, the $9.4B generated illicitly over the course of one year significantly reduces the severity of its economic problems. Russia's ability to resource its illegal war in Ukraine, through grain theft, sanctions evasion and obfuscated oil transactions, will continue unabated unless further pressure is applied to the Shadow Fleet.


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Exposing Russia's tactics to evade oil sanctions and fund its illegal war in Ukraine.

In the Shadows: How Russia Evades Oil Sanctions

Over two and a half years into Russia's full-scale invasion of Ukraine reports show that Russia is struggling to provide enough equipment to keep up with the losses suffered.

As Ukraine continues to target and successfully destroy Russian ammunition depots Russia continues to receive help from friendly countries to keep their stocks of ammunition high enough to meet the demands of the conflict. International sanctions have complicated this situation for Russia however they continue to find support in return for exporting technology and commodities to partners.

Let's take a look at some of the countries that have supported Russia's invasion of Ukraine, what they have provided, and how it aids their ability to strike military targets and civilian settlements in Ukraine.

## China
Beijing has been accused of selling military equipment to Russia including electronics and components used in military hardware in return for information on technological advancements. It is reported that 70% of the machine tools and 90% of the microelectronics Russia imports comes from China. Chinese companies have also been reported to provide non-lethal military aid such as protective gear and surveillance equipment which Russia could use for intelligence gathering. China's involvement raises questions about its commitment to comply with international sanctions.

## Iran
Iran has been one of the most significant suppliers of weapons to Russia providing drones including the Shahed-136 and Mohajer-6. These UAVs have been used to devastating effect against Ukrainian cities and infrastructure causing damage and loss of life. Reports also suggest that Iran may be supplying Russia with short-range ballistic missiles. Iran's support for Russia marks a significant escalation in their military relationship.

## North Korea
North Korea has a long history of cooperation with Russia and has been providing Moscow with artillery shells and rockets. North Korea's stockpiles of Soviet-era artillery shells are in demand from Russia. This partnership highlights the enduring relationship between North Korea and Russia and once again demonstrates the challenges of enforcing international sanctions.

## Belarus
Belarus has played a crucial role in Russia's war effort, providing logistical and material support to Russian forces. The country has allowed Russia to use its territory as a staging ground for attacks on Ukraine and has also provided repair facilities for Russian equipment damaged in the conflict. Belarus has also been involved in training exercises with Russia, these points suggest that Belarus is deeply invested in Russia's war effort.

## Conclusion
Russia's ability to bolster its military-industrial complex through strategic partnerships with key nations has proven instrumental and its impact is only going to grow in sustaining its war effort. The involvement of countries such as Iran, North Korea, and Belarus has significantly contributed to Russia's ability to circumvent international sanctions and maintain a steady supply chain. As the conflict in Ukraine persists it is evident that Russia will need to exploit all available channels to acquire the necessary resources to sustain its war effort. Whether it is able to achieve this may be the determining factor in the outcome of this protracted conflict.


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A look at some of the countries that have supported Russia's invasion of Ukraine.

Supplying the War Machine:Countries Supplying Arms to Russia

Tensions are rising between Prigozhin, The Russian Ministry of Defense, and the Kremlin as small and strategically **'Insignificant'** gains are made on the eastern front.

### Tensions Build
Russian forces have been on the eastern front for over 8 months now and have only just taken their first apparent 'strategic' settlement of Soledar. But was it conventional Russian forces that 'succeeded'? Or was it the Private Military Company, Wagner, that took the settlement by attrition and numbers, sacrificing potentially up to 10,000 men for the settlement. NOTE - The capture of Soledar was not the primary objective on the eastern front. Bakhmut was and still is the primary objective for Russia. Soledar was meant to allow a partial encirclement of Bakhmut leading to its capture by Russian forces. This is not possible and will not happen due to: up to 10,000 Wagner mercenaries being killed rendering the next advance on Bakhmut almost impossible due to lack of numbers, and the main 'strategic' choke points have not been captured in the Soledar area, meaning Bakhmut is not and will not be encircled.

### What is Going On?
On January 12, the Russian MoD publicly praised the assault and army aviation, missile and artillery groups, and airborne VDV forces for capturing Soledar. There was no mention of Wagner. Until 6 hours later when another MoD statement was made recognizing Wagner volunteers and Assault Detachments for helping secure residential areas. This probably upset Prigozhin who now appears to be carrying out his own information operations on the Russian MoD, the Kremlin, and his President. It isn't just one way though. As the illegal yet conventional war continues in Ukraine, a modern social media vs. conventional media war is being waged in Russia and online. Prigozhin and Putin are at the heart of it.

## Recent Events of Prigozhin, Putin, and the MoD

### What Has Prigozhin Done Recently Then?
- Prigozhin seems to be using Soledar as a bargaining chip to elevate his authority in Russia. The MoD initially claimed conventional Russian forces victory, with no mention of Wagner. They then backtracked and acknowledged them - it appears as though the MoD are struggling to keep their messaging in order.
- Prigozhin played on questions put to him by journalists regarding his future meeting with Putin where he said he would look to discuss Wagner's success in taking Soledar. This undermines Gerasimov and Shoigu and the whole Russian MoD.
- Prigozhin personally visited Soledar in the days leading up to the seizure of the settlement, capitalizing on the media presence and taking photos of him with his Wagner mercenaries allegedly 'advancing'.
- He pre-empted the announcement by the Russian MoD on January 12 by accusing unnamed bureaucrats and government officials of "constantly trying to steal the victory from Wagner PMC". The MoD did indeed then claim full victory with no mention of Wagner forces.
- Milbloggers. both independent and Wagner affiliated churned out articles heavily criticizing the Russian MoD for its reporting and handling of the Soledar 'victory'. The Russian MoD being beaten by an illegal PMC at information warfare?
- Openly argued against the Russian MoD's latest Operational Security update regarding the new guidelines for Russian troops in Ukraine that restrict the use of smartphones and set strict guidelines for soldiers' beards. Prigozhin claimed that beards are customary for many Muslim and Orthodox Christian fighters and claimed that soldiers' use of smartphones was necessary in modern combat.
- Called out members of Putin's Presidential Administration on telegram on January 18 claiming some members are traitors for not wanting to ban YouTube as they want Russia to fail in Ukraine so that a dialogue can be opened with the US.

![Yevgeny Prigozhin](/uploads/Yevgeny_Prigozhin_f1c514d14c.png)

### Putin Reacts
- Ordered United Russia Part Central Executive Committee Head Alexander Sidyakin, United Russia State Duma parliamentarian Artyom Turovyi, and Donetsk People Republic Head Denis Pushilin met with multiple milbloggers on January 13. He's trying to gather support from his own milbloggers.
- On January 15, Putin publicly attributed the success on the Soledar frontline to the Russian MoD and General Staff. He did this using his favorit means of mass messaging, live television - the form of media that he relied on most throughout his early days in power. Maybe he doesn't know how to use Telegram, or Twitter (or he doesn't have a VPN?). This public acknowledgment is odd. He has never commented on small 'tactical' advances in Ukraine. Is he nervous that Prigozhin has a hold over the media? Is he trying to flex and regain control?
- Putin seems to be increasingly siding with Prigozhin's adversaries more often, likely in order to degrade Prigozhin's influence through Russia and amongst the Ground Forces oeprating illegally in Ukraine. On January 18, Putin met with St. Petersburg Governor Alexander Beglov - an enemy of Prigozhin (ISW) - to discuss St. Petersburg's role in the war in Ukraine. NOTE - Prigozhin has previously launched a campaign petitioning for the removal of Beglov from his office for treason for failing to support the Russian war effort. Prigozhin-affiliated outlets published exposes on Beglov claiming he had deliberately impeded the advertising efforts for recruitment into the three St. Petersburg local battalions.
- He continues to double down on the official rhetoric that only conventional Russian forces captured Soledar, publicly rejecting Prigozhin's claims that Wagner played a part in the small 'tactical' victory.

![Yevgeny Prigozhin and Putin](/uploads/Yevgeny_Prigozhin_and_Putin_881a87028c.png)

### MoD Being Told What To Do? By Who?
- On January 15, alongside Putin's television address, the Russian MoD continued to report that VDV units were attacking Ukrainian positions with no mention of Wagner in the briefings.
- Kremlin spokesperson Dmitry Peskov noted in his January 16 briefing that the conflict is a "product of information manipulation" and that there manipulations may come from Russia's 'enemies', they may also be coming from the Kremlin's 'friends' - any need to beat around the bush? Just name Prigozhin. And what did Prigozhin have to say about this? Did he deny and assert that there was no bad blood between the Russian MoD and Wagner? No, he continued his tactic of providing vague messaging to create more unrest and increased discussion in the Russian information space. Interestingly, on January 15, he awarded a medal to a Wagner mercenary who had previously been given the medal of courage from Putin.

![Gerasimov and Shoigu](/uploads/Gerasimov_and_Shoigu_212fd8e077.png)

### So What Next?
Russia is waging an illegal war in Ukraine and an information war online. Can Putin and Prigozhin, the MoD and Wagner keep up on both fronts? The more this continues, the greater the tension builds, and then what? Does Prigozhin have enough support from his milbloggers, journalists, and Russian citizens to continue his information war online? The tensions of war appear to be enough to break up even the closest of friends. Who would have thought that a President and his former hot-dog vendor best friend could fall out.

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Tensions are rising between Prigozhin, The Russian Ministry of Defense, and the Kremlin as small and strategically 'Insignificant' gains are made on the eastern front.

Where is Russia Today?

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Russia's Secret Strategy for Oil Sanctions Evasion

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In the Shadows: How Russia Evades Oil Sanctions

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Supplying the War Machine:Countries Supplying Arms to Russia

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