The Kremlin has never been richer – thanks to a US strategic partner

Russia is entering its third year of war in Ukraine with an unprecedented amount of cash in government coffers, bolstered by a record $37 billion of crude oil sales to India last year, according to new analysis, which concludes that some of the crude was refined by India and then exported to the United States as oil products worth more than $1 billion.This flow of payments, ultimately to Moscow’s benefit, comes from India increasing its purchases of Russian crude by over 13 times its pre-war amounts, according to the analysis by the Centre for Research on Energy and Clean Air (CREA), exclusively shared with CNN. It amounts to US strategic partner New Delhi stepping in to replace crude purchases by Western buyers, reduced by sanctions over Russia’s invasion of Ukraine, the analysis said.While Russian crude sales to India are not subject to sanctions and are entirely legitimate, an examination of shipping routes by experts suggests this huge volume of shipments might involve the so-called “shadow fleet” of crude tankers, specially created by Moscow to try to disguise who it is trading with and how, and maximize the Kremlin’s profits.. Two oil tankers – one massive, the other smaller – sidled up next to each other for a ship-to-ship transfer, which involves passing crude oil between vessels, sometimes with the aim of disguising its origin and ultimate destination.The two tankers have colorful histories. Both embarked from Russia weeks earlier. One is owned by an Indian-based company accused of involvement in sanctions violations, and the other was previously owned by an individual subject to separate US sanctions, according to shipping monitoring firm Pole Star Global.“Transfers are (sometimes) done legally, but they’re also used as an illicit tactic to evade sanctions,” said David Tannenbaum at Pole Star Global. “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.”Dozens of similar transfers occur each week in the Laconian Gulf of Greece, a convenient waypoint en route to the Suez Canal and Asian markets, analysts say.

Earlier in February, the US Treasury rolled out a new package of sanctions against ships and companies suspected of helping move Russian crude in violation of US sanctions, in a bid to impede the functioning of Russia’s shadow fleet.

The United States led a coalition of countries in late 2022 that agreed to a “price cap,” undertaking not to buy Russian crude above $60 a barrel. Those nations also forbade their shipping companies and insurance firms – key players in global shipping – from facilitating the trade of Russian crude above that price.“The price cap was the real trigger for the creation of the shadow fleet,” said Viktor Katona, head of crude oil analysis at trade research firm Kpler. “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.”