Russia oil fleet shifts away from Liberia, Marshall Island flags amid US sanctions crackdown

Reuters:  Dozens of oil tankers used by Russia have stopped sailing under the Liberian and Marshall Islands flags in recent weeks after the United States ramped up sanctions enforcement on ships linked to those registries, according to shipping data and interviews with industry and government officials.

The shift reflects the close relationship between the U.S. and the flag administration companies of Liberia and the Marshall Islands, which are headquartered not in their home countries, but in Virginia, just miles from Washington D.C. and within the jurisdiction of U.S. sanctions enforcement.

The heavy past use of those flags also represents a potentially lasting vulnerability for Russia’s oil fleet, whose tankers will remain liable for sanctions violations even after they have switched to a new flag outside of U.S. reach, according to energy and sanctions specialists.

"They've created an enduring liability and enduring risk," said Craig Kennedy, a center associate at Harvard University's Davis Center for Russian and Eurasian Studies.

Commercial ships must be registered, or flagged, with a particular country to ensure they are complying with internationally recognized safety and environmental rules.

Reuters analyzed LSEG and Lloyd's List Intelligence shipping data, and interviewed government officials, flag registry representatives and shipping analysts to provide previously unpublished details on the role of flag registries in the recent wave of U.S. sanctions announcements targeting Russia's oil fleet, and the vulnerabilities they pose to Russian oil shipping.

The G7, the EU and Australia imposed a $60 a barrel price cap on Russian oil exports in December 2022 as part of wider economic sanctions aimed at cutting Moscow’s revenues without disrupting global energy supplies, following Russia’s invasion of Ukraine.

The cap bans the use of Western maritime services when tankers carry Russian oil priced at or above the cap. A U.S. official, who requested anonymity when speaking about the sanctions, confirmed that the Liberian and Marshall Islands flag registries qualify as Western services.