The global shadow economy behind Trump’s latest move on Venezuela

Following this week’s seizure of a sanctioned ship off the coast of Venezuela, the Trump administration says it will be targeting more oil tankers off the Venezuelan coast. This is, first and foremost, a dramatic escalation in the Trump administration’s campaign targeting Venezuela’s President Nicolás Maduro, whom the White House accuses of facilitating drug trafficking into the United States. 

But it’s also the latest salvo in a campaign by Western governments to crack down on the so-called shadow fleet that has allowed countries like Venezuela, Russia, and Iran to continue participating in the global oil trade, despite international sanctions. In the past few days, there’s been yet another major escalation in this campaign, off the coast of Ukraine. 

As Vox reported last year, the shadow fleet has been operating for years. Shadow fleet vessels tend to have opaque ownership; the nominal owner is often little more than a PO Box in the Seychelles or Dubai. The ships operate without standard insurance, are often older and less well-maintained than their above-board counterparts, and frequently manipulate their transponders and navigation system to avoid detection. They frequently change names and what country’s flag they sail under. 

Case in point, the vessel seized by the US this week was sailing under the name Skipper and the flag of Guyana — but it had been sanctioned by the Biden administration in 2022 when it was known as the Adisa and flew the flag of Panama. As the Washington Post reported, the ship allegedly made several trips in and out of Iran last year along with stops in China and Syria, but it frequently turned off its data location transmission to prevent tracking. It had been operating off the coast of Venezuela since October, but had electronically masked its location, so it appeared to be off the coast of Guyana. 

According to analysts quoted by Reuters, the Skipper was loaded with oil in Venezuela at the beginning of December and had transferred some of it to another tanker bound for Cuba shortly before it was seized. Cuba has been dependent for years on oil exports from its ideological ally Venezuela. While Cuba long relied on its own tankers for this trade, lack of maintenance has forced it to rely on the shadow fleet. Crumbling infrastructure and sanctions have taken a toll on Cuba’s energy system, and blackouts have become common. For the United States, increasing the pressure on Cuba’s economy could be seen as an added bonus of targeting the shadow fleet. 

Globally, the issue has taken on a much greater prominence since Russia’s invasion of Ukraine in 2022, which triggered a range of international sanctions meant to deprive the Kremlin of energy revenue. As Atlantic Council senior fellow Elisabeth Braw told Vox, Venezuela and Iran were long the main players in the shadow fleet, but “Russia’s involvement was a sort of quantum leap that brought this economy out of the shadows.” By some estimates, shadow vessels now account for around 20 percent of the entire global oil fleet — essentially a parallel global energy market. 

Officials and analysts have been concerned about the shadow fleet not only because it provides an economic lifeline to these regimes, but also because of the risk that one of these decrepit, poorly maintained ships could be involved in an environmentally devastating spill, and that there would be no insurance company or accountable owner to clean it up. 

As Slate’s Fred Kaplan notes, while the Trump administration has portrayed the Skipper seizure as part of its pressure campaign against Venezuela, it’s the sort of action you could imagine being taken by any administration. (The ship was originally sanctioned by Biden, after all.) It’s also notable in that the seizure was carried out by a law enforcement agency — the Coast Guard — in accordance with a seizure warrant. That differs from the recent strikes on alleged drug boats that were carried out by the military with virtually no legal authorization. 

The Caribbean is also not the only place where the shadow fleet has come under attack in recent days. In the past two weeks, Ukrainian forces have struck five shadow fleet tankers carrying Russian oil: three in the Black Sea near the Ukrainian coast, one near Turkey, and one off the west coast of Africa. 

This marks a shift in strategy for the Ukrainians, who have avoided hitting Russian commercial ships in recent years. Russia and Ukraine have been operating under an effective truce in strikes on Black Sea shipping since the early days of the war. The new attacks are a high-risk strategy, since they could lead to Russia retaliating against Ukrainian ships. The shift may be a sign of increasing desperation for the Ukrainians, who have been steadily losing territory to Russia on land and are under pressure from the Trump administration to sign a ceasefire that would likely include significant concessions to Russia.

The shadow fleet strikes also show one of the contradictions of Trump’s approach to the war: Though he has been pressuring Ukraine to back down at the negotiating table, his administration has been far more permissive than Biden’s when it comes to Ukrainian attacks on Russia’s energy infrastructure. (There were fears under Biden that attacks like these could lead to a spike in oil prices.)

The timing of the US seizure in the Caribbean and the Ukrainian strikes in the Black Sea is almost certainly coincidental. This doesn’t appear to be a coordinated campaign. But both are reminders of the complex shadow economy that has sprung up in recent years in response to Washington’s increasing use of sanctions. And both may be a sign that much more aggressive measures are coming to crack down on that economy.