Iran Crisis as a Gift for the Kremlin: Russia's Shadow Fleet Rakes in Billions from the Oil Shock

After the United States and Israel carried out military strikes on targets in Iran in late February and Tehran subsequently closed the Strait of Hormuz, through which approximately a fifth of the world's oil supplies pass, fuel prices shot upward. The main economic winner of the conflict is not any of its direct participants. It is Russia. Modern Diplomacy ↗

According to calculations by the Reuters agency, Russia's revenues from its main oil tax — the mineral extraction tax — doubled in April to approximately 700 billion rubles ($9 billion), compared to 327 billion in March. The price of Russian Urals crude jumped from $57 per barrel on February 27 to $116 per barrel in early April — a thirteen-year high. The Russian budget had been calculated on the basis of $59 per barrel. Reuters/Investing.com ↗

The Kremlin, by its own account, is registering "a huge number of requests for Russian energy from various places" amid the global energy crisis. Washington temporarily granted India an exemption from sanctions so it could continue purchasing Russian oil. India, which imports more than 85 percent of its consumption, secured 30 to 60 million barrels within a few days, and seven tankers were rerouted mid-voyage. National Maritime Foundation ↗

One of the key tools enabling Russia to circumvent sanctions even without exemptions is the so-called shadow fleet — a network of approximately 1,400 old tankers that transport roughly six to seven percent of the world's oil. These vessels switch off their transponders, transmit false position signals, and change registration several times a year under the flags of states such as Gabon, the Cook Islands, or Saint Kitts and Nevis, where regulation is minimal. Irregular Warfare Center ↗

Malaysia has become the center of these operations. Russian tankers set sail from Baltic or Black Sea ports and meet other vessels off the coast of Penang or near Johor, Malaysia's southernmost state. On the open sea they transfer their cargo — a so-called ship-to-ship transfer. The destination is usually China. iDNES ↗

The Center on Global Energy Policy (CGEP) at Columbia University points to a significant discrepancy: in 2025 China imported approximately 1.3 million barrels of oil per day declared as being of Malaysian origin, even though Malaysia at the time produced only 535,000 barrels per day. The difference — nearly 800,000 barrels — consists of oil of Russian, Iranian, and Venezuelan origin "laundered" through Malaysian waters. iDNES ↗

Urals crude has a specific sulfur content and density. In Malaysian waters, it is mixed in a tanker with oil of a different origin — for example, lighter Iranian or local crude — creating a blend that is declared in port documents as Malaysian or Singaporean. Ownership structures are similarly opaque: a ship does not belong directly to a Russian company but to a shell company in Dubai or Hong Kong, and a single tanker can have three different technical managers during a single voyage.

Malaysian authorities intervened twice this year. In February they detained two tankers carrying oil worth 512 million ringgit ($130 million). On board were 53 sailors of Chinese, Myanmar, Iranian, Pakistani, and Indian nationality. According to the specialist portal gCaptain, one tanker, after being released, sailed away empty toward Iran, while the other headed to China with its cargo. gCaptain ↗

In early April, the Malaysian Maritime Enforcement Agency (MMEA) detained two more tankers off Penang carrying 800,000 liters of diesel. Among the 22 crew members arrested were citizens of Malaysia, Myanmar, Russia, the Philippines, and Indonesia. Fines for illegal ship-to-ship transfers amount to only 200,000 ringgit (about $50,000) — a fraction of the cargo's value. iDNES ↗

Europe, meanwhile, is responding more forcefully. In January, the US Navy and Coast Guard detained the Russian tanker Marinera in the North Atlantic. The Belgian navy confiscated the tanker Ethera in the North Sea in March — the ship was sailing under a false Guinean flag with forged documents. French President Macron declared that "Europeans are determined to cut off the sources of financing for Russia's war." Euronews ↗

An investigation by the organization OCCRP has added a security dimension to the entire operation. An analysis of crew lists from 20 tanker voyages in the Baltic Sea showed that individuals with ties to the Wagner Group, the GRU military intelligence agency, and special forces are present on board. On the tanker Boracay, detained by the French navy, two men from the security firm Moran Security Group were found — one a former police officer who had previously served in the Wagner Group under the leadership of Yevgeny Prigozhin. OCCRP ↗

According to European intelligence services, their role is not merely to protect the cargo. They are meant to deter authorities from inspecting the ships, prevent the crew from cooperating with foreign authorities, and gather intelligence on the responses of Western navies. Former CIA officer Sean Wiswesser told OCCRP: "This is certainly not just about protecting oil" — referring to a series of severed undersea cables in the Baltic Sea. OCCRP ↗

Sweden detained another shadow-fleet tanker in early April, and the Russian navy has reportedly been observed, according to Denník N, escorting tankers used to evade sanctions even in British waters. According to Denník N, a Russian citizen operating from Prague helped insure these ships — after being placed on the sanctions list, he transferred ownership of his apartment and quickly left the Czech Republic. Novinky.cz ↗

Analysts at India's National Maritime Foundation point out that Russia's gains are "situational, not structural" — dependent on how long the Iran crisis lasts. Russia recorded a budget deficit of 4.58 trillion rubles in the first quarter, and Ukrainian strikes on energy infrastructure threaten extraction itself. April 2026 may thus go down as the month when one war financed another — and 1,400 old tankers moved billions beyond the reach of sanctions. National Maritime Foundation ↗