Following Russia’s invasion of Ukraine, Western countries have slapped the energy-rich country with an unprecedented wave of sanctions which are disrupting global commodity markets.
Some countries have outright banned imports of Russian crude, such as the US, the UK, Canada, and Australia. Other countries, such as Italy, Japan, Germany, and France, have committed to reducing energy dependence on Russia. Import bans don’t just stop at energy but are also across the board, including agriculture, petrochemicals, and metals.
As for countries that still trade with Russia, a tactic known as “going dark” has been spotted in Russian waters, according to Bloomberg.
Windward Ltd., an Israeli-based shipping consulting firm, said in the week ending March 25, at least 33 commercial vessels spotted in or around Russia’s exclusive economic zone turned off their automatic identification system, or AIS. That’s more than double the weekly average of 14 over the prior week.
These dark ship-to-ship meetings transfer cargo to other vessels without sanctions. Windward said the ships going dark include ones connected to major corporations and multinational shipping firms.
Going dark has been flagged by the US Treasury as one of several “deceptive practices used to evade sanctions” in the maritime industry. Disabling a ship’s AIS is easy though it can be fraught with danger because other vessels in the area will not be able to see them.
“There’s no reason why they should have their AIS turned off,” said Gur Sender, Windward’s program manager who specializes in compliance and risk issues, unless it’s for illegal activity to evade sanctions.
“Investigating if a vessel is engaged in deceptive shipping practices related to specific regimes is crucial to protect your business from dealing with sanctioned entities,” Sender said.
S&P Global Commodity Insights outlines the latest wave of sanctions on Moscow that cover a wide range of commodities. The goal of sanctions by Western countries is to paralyze and crush the Russian economy for the Ukrainian invasion.
It’s not just sanctions. Major corporations have also shunned commerce with Russia. The international community shames any corporation that continues to do business with Russia unless they go dark:
Ian Ralby, chief executive of I.R. Consilium, a maritime law and security consulting firm that works with governments, said countries and companies not imposing sanctions on Russia are more inclined to conduct dark activities to hide their business dealings.
“Russia has quickly become a pariah state so they are obscuring some of their activities because a lot of people on both ends of a transit don’t want any association with Russia.
“Anywhere that Russia appears in the overall management or operation and ownership of the vessel, there are concerns about dark activity right now. Almost anything that they are going to be doing is gaining scrutiny and legal concerns because of all the various sanctions,” said Ralby.
The sanctions and conflict in Ukraine have disrupted global commodity markets, producing shortages of agriculture, energy, and metals worldwide. Countries will still need Russian commodities as they’re one of the largest exporters, though the very act of how they will obtain it goes dark (for now).
The news follows reports of Russian oligarchs switching off AIS on their superyachts, hiding private jets, and other trophy assets from Western sanctions.