All about Shipping fleets - Western vs Shadow vs Dark

The "Western Fleet" is the largest (90% of the global tanker fleet) with the most transparent with links to Western insurance and finance. The Western Fleet’s oil and product tankers of 45,000 dwt size and above, mandatorily have P&I (“Protection and Indemnity") maritime insurance cover underwritten by one of 13 P&I Clubs. Maritime policies cover large transnational marine liability risks including the property or interest (the ship including hull and machinery of the ship, the cargo, and the freight (the charterer fee for transporting goods)) insured against perils of the sea such as bad weather, stranding, collision, fire seizure and the like based on an assumed estimated maximum loss (EML) factor with or without Demurrage protection regardless of where the cargo is moving. The high-risk environment produced by ongoing security challenges in the Black and Red Seas has complicated the premium rates and issuance of war risk insurance to the detriment of oil shipping. The cost of insuring a ship through the Red Sea has more than doubled since the start of 4Q2024 and some underwriters undertaking to make good the loss of an interest in the carriage venture are pausing cover as the risk of attack from Yemen's Houthis on commercial vessels increases.



The "Shadow fleet" comprises of more than 360-odd ships, typically more than two decades old relying on sovereign insurance and financing from the Russian state as they may be used to circumvent international sanctions. These “Shadow fleets”, equivalent to 16% of the global crude tanker inventory, keep Russia’s crude exports flowing dodging the “Russia oil price cap” being less transparent than the Western fleet, avoiding disclosures on charterers and undertaking longer journeys than they have ever done before to undisclosed destinations with middlemen only paying for the cargo once they have collected the proceeds.

"Dark fleets" consist of around 100 battered tankers as much as half a century old which actively try to hide activity by turning off satellite transponders or sending spoof signals. These "dark fleets" engage in covert trade in crude from Iran and Venezuela to clandestine customers, but similar activities are starting to emerge in Russia. They are renamed and repainted, sometimes several times a journey. They often transit via busy terminals where their crude is blended with others, making it hard to detect. Were they to cause an accident, the insurers may be unwilling or unable to cover the damage.

How India is following in China's footsteps as the future driver of global energy demand

The extensive growth and energy consumption seen in China through the 2000s and 2010s hint at the magnitude of changes and energy use increase expected in India over the 2030s and 2040s.

• India’s Real GDP per capita at PPP had risen to $7,100 in 2022, a rate China first reached in 2007/08 (“World development indicators”, World Bank, 2023). Real incomes are still less than half the level in China and a sixth of the average for the OECD), so there is enormous catch-up potential.
• Median population age is low at 27.9 years, which China reached in 1998. Massive Population growth averaged 1.1% per year over the 10 years from 2012 to 2022, similar to China’s over the ten years from 1988 to 1998 (“World population prospects”, United Nations Population Division, 2022).
• The share of the population living in urban areas is estimated to have reached 35% in 2022, a level reached in China around 2000 (“World urbanization prospects”, United Nations Population Division, 2018).
• Energy consumption reached 26 gigajoules per person in 2022, a rate China reached in the early 1990s. India’s primary energy consumption per person is less than a quarter of China’s and one-sixth of the average in the OECD economies, again implying an enormous potential to increase as the gap narrows. Total oil consumption climbed to 237 million metric tons in 2022, which China first reached in 2001 (“Statistical review of world energy”, Energy Institute, 2023).

How Indian refineries purchased Russian crude through Dubai in 2022 and 2023

Throughout 2022 and early 2023, Indian refineries purchased Russian crude through Dubai-based intermediaries such as Hinera Trading, Black Pearl Energy Trading, Starex Trading, and Pontus Trading, as well as Dubai-based proxies for Russian NOCs Everest Energy, DMCC and Lukoil Litasco.

Indian rupees were utilized to bypass SWIFT for Russian oil payments, resulting in Russia accumulating surplus rupees in vostro accounts within India. By mid-2023, Russia ceased accepting rupees for energy trade, leading private Indian refiners to pay for Russian oil in Chinese Yuan while state-owned refiners paid in UAE Dirhams.

In 2024, the threat of U.S. sanctions complicated UAE Dirham transactions, consolidating the dominance of only three middlemen—Lukoil Litasco Middle East, Hinera Trading, and Black Pearl Energy Trading—as primary sellers of Russian crude to India.