- [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.

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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)