(soft electronic music) - [Narrator] In early December,
an oil tanker called C1 arrived at the largest oil terminal in the United Arab Emirates. - C1 is the typical representative
of the shadow fleet. The shadow fleet is a new
concept that emerged in 2022, after the beginning of
hostilities In Ukraine. - [Narrator] The shadow
fleet is a term for around 100 tankers that transport
Russian oil and oil products, skirting Western sanctions, and ports of the oil-rich
UAE and Saudi Arabia are now some of the key
destinations for tankers like C1. Here's how Western sanctions
have created an economic boom for the Gulf States, who
are looking to capitalize on discounted Russian oil. (soft electronic music continues) The shadow fleet is the
Kremlin's response to the West imposing a price cap on
its oil in December, 2022. It means that western companies
can only transport, trade, or ensure Russian oil if it is sold at or below $60 a barrel. - Well, the Russian reaction
was exactly the opposite. They started to build
out their own shipping, and they started to build
out their own insurance. - [Narrator] Viktor Katona
is the lead crude analyst at commodity data company, Kpler. MarineTraffic, a
ship-tracking and maritime analytics provider, is part of Kpler. Katona has identified dozens
of tankers that he says meet the criteria for
a shadow fleet vessel. It's a ship that works almost exclusively with Russian oil and oil products. It changed ownership after Russia launched its full-scale invasion
of Ukraine in 2022, and it operates almost
exclusively out of countries like the UAE, India, and China. C1 checks all the boxes. - So, C1 changed its ownership, and back in 2022, in December, so the month when the oil
price cap was implemented, the ownership is also very murky, and it's based in the Marshall Islands and operated by an Indian company. Over the past year, it
has dealt exclusively with Russian oil and Russian oil products. - [Narrator] C1 recently
traveled from Fujairah in the UAE to Russia's Baltic port of Ust-Luga, with a stopover at the
Saudi ports of Jeddah. While the majority of
shadow tankers travel to India and China, many
have found their way to oil-rich nations, like
Saudi Arabia and the UAE. - The Middle East is historically
a very uncommon place for Russian volumes to go, and it's really the opportunistic trading potential of that trade. Everything is discounted
coming out of Russia, so you could buy Russian
diesel into Saudi Arabia and use it domestically, and then you have more
to export into Europe. Saudi Arabia is exporting
250,000 barrels per day of diesel into Europe and almost
doubling the overall flows of Middle Eastern products
into the European market. - [Narrator] At the same time,
Russia's gas oil shipments to Saudi Arabia reached
100,000 barrels a day in 2023, compared to virtually none
before the Ukraine war, and the UAE has become a major
storage and re-export hub for Russian oil products. - The Port of Fujairah
is really the place to be in the Middle East, the place where most of
the blending happens. When it comes to fuel,
once it's been discharged, it can pretty much disappear
into the large amounts of tankers that are present in Fujairah. - [Narrator] On the day
C1 docked in Fujairah, just over 100 miles away, Russian
president, Vladimir Putin, was warmly welcomed in
the capitol of the UAE with a fly-by in the
colors of the Russian flag and in escorts of camels
and soldiers on horseback. Besides buying Russian oil,
the UAE has provided Moscow with a financial base to trade its crude, a role held by Geneva before 2022. - Dubai has become the new
Geneva for Russian oil companies. Almost every single company has relocated its trading operations into Dubai. - [Narrator] In the first
nine months of 2023, trade between Russia
and the UAE went up 63% compared to the same period in 2022, and the Gulf Nation
also reaps the benefits. - A lot of the finances have moved into the United Arab Emirates. Even trade with India is quite frequently done in their arms. The UAE has a currency which
is pegged to the dollar, so it basically is the same as if one was trading in U.S. dollars, but it doesn't have
the sanctioning impact, because the UAE is not against
effectively having more of the GDP created by these entities. (majestic orchestra music) - [Narrator] In talks with
the president of the UAE in December, Putin hailed
the bilateral ties. (Putin speaking in Russian) Russia, Saudi Arabia and
Gatik Ship Management, which operates C1, and whose office is
registered in Mumbai in India, didn't respond to requests for comments. The UAE said it's strictly abides by United Nations sanctions, and it's committed to maintaining balanced strategic and economic relations. The UN hasn't put limits on
the oil trade with Russia. - For the Middle East,
this has been a huge boom, and a lot of money has
been made in 2022, 2023, and the Russians don't care that much about maximizing their revenue. They're really trying to shield
the oil trade that they have from the impact of sanctions. If sanctions stay the way that they are, I don't think anything will change. The status quo will be very
much protracted across 2024. It will be the same thing all over again. (soft electronic music)
