Russia continues to flood its war coffers against Ukraine with a "shadow fleet" of tankers that helped the Kremlin amass a record unsanctioned $37 billion in crude oil sales to India last year, CNN reported Monday.
Further, thanks to a loophole, India turned around oil products that it exported to the United States for more than $1 billion, according to CNN.
Russia uses an estimated 1,800 ships to evade Western sanctions by using ship-to-ship transfers of the oil in the Laconian Gulf off Greece, according to the report. The receiver vessel then takes a non-direct shipping lane to India, which increased its purchases of Russian crude by more than 13 times pre-war amounts, CNN reported.
"Transfers are (sometimes) done legally, but they're also used as an illicit tactic to evade sanctions," Pole Star Global's David Tannenbaum told CNN. "You're adding multiple layers to the shell game of vessels as they try and confuse authorities as to where this oil is coming from and who's buying it at the end of the day."
The U.S. spearheaded an effort of Western countries to slap Russia with sanctions over its invasion of Ukraine by agreeing to a price cap on Russian crude oil. The coalition agreed not to buy Russian crude above $60 a barrel.
"The price cap was the real trigger for the creation of the shadow fleet," Viktor Katona, head of crude oil analysis at trade research firm Kpler, told CNN. "The longer the supply chains, the more difficult it is to disentangle ship-to-ship transfers, the more difficult it would get … to determine the real cost of a Russian barrel."
Pole Star Global told CNN it found more than 200 transfers of oil between ships in the Laconian Gulf that made its way to India.
"You really needed to have a reason to transfer 60-plus million barrels in the middle of the ocean and export them to India because it's much easier not to do that — to sail directly," Windward CEO Ami Daniel told CNN.
The U.S., ironically, ended up as the biggest global buyer of refined oil products from India, made by Russian crude, from December 2022 through the end of 2023 via a "refinery loophole," whereby products refined outside of Russia are not subject to sanctions.
The U.S. bought $1.3 billion of Russia-made products from India in that time frame.