Maritime Global Trade Roundup – May 9, 2024

Russia and the Democratic People’s Republic of North Korea (DPRK) are strengthening ties to circumvent the oil cap and Iranian ships are using flag-switching (with which flags?) to evade sanctions, and more. This week’s Maritime Global Trade Roundup analyzes these subjects and more. Check out the easily-digestible highlights and trends, powered by Maritime AI™ insights.

The Strengthening of a Worrisome Alliance 

• The White House recently announced that Russia has been quietly shipping refined petroleum to the Democratic People’s Republic of North Korea at levels that appear to violate the cap imposed by the United Nations Security Council. The announcement came after the UN Panel of Experts on the DPRK was disbanded, after Russia vetoed the renewal of the panel’s mandate.
• The White House also noted that in March 2024, Russia shipped more than 165,000 barrels of refined petroleum to North Korea. Russia could sustain these shipments indefinitely, given its proximity to North Korean ports.
• According to Windward’s AI insights, there has been a steady increase of dark activities conducted by Russian-owned oil-product tankers in the last two years. They occurred in the area shown by the UN Panel of Experts as a possible site for oil trade with the DPRK. Based on former cases noted by the panel in which vessels owned by the DPRK were spotted receiving oil via “dark ship-to-ship (STS)” meetings – in a polygon stretching out between Russia and up to Taiwan – DPRK-affiliated vessels were spotted conducting unofficial, ship-to-ship meetings and multi-staged STS operations to transfer oil. 

For further information, please see the panel’s latest report or vessels that entered while dark into the DPRK EEZ. 

• March 2024 marks the highest number of dark activities by Russian-owned oil products tankers in the polygon, with a 250% increase compared to the average rate of dark activities over the past two years.

_{Dark activities during possible oil trades in the DPRK polygon by Russian-owned oil-product tankers, January 2022-April 2024.}

• Examining the profile of the vessels that might be related to Russian oil trade with the DPRK, data shows that 80% of all oil products tankers that conducted a dark activity in the polygon are sailing under the Russian flag, while 17% are sailing under the Gabonese flag. The Gabonese flag was recently implicated due to Russian vessels reflagging for sanction evasion. All Gabonese-flagged vessels engaging in dark activities in the polygon are also owned by the sanctioned Russian company “Pao Sovcomflot,” while the vast majority of other vessels that conducted dark activities in the polygons are owned by other smaller Russian companies.
• Data also shows that the majority of vessels are old vessels, built between 1980-1989 (38%) and 2000-2009 (35%). Sailing these old vessels poses a great environmental risk. 55% of the vessels are considered smaller tankers, ranging from 50-100 meters in length. 
• Based on optical satellite imagery, it appears that on May 1, 2024, at least 10 tankers, ranging between 100-200 meters, were anchored while not transmitting their AIS signal at the vicinity of the port of Nampo, North Korea, which is equipped with oil facilities. 

It is possible that some of these vessels are not DPRK-owned tankers, and there might be foreign vessels allowed in the DPRK EEZ for oil delivery.

• It should be remembered that based on the panel, most oil deliveries, including crude and refined petroleum products, arrive at the port of Nampo either directly through foreign vessels, or indirectly through multiple STS meetings to mother vessels and smaller DPRK vessels that arrive at Nampo. This has resulted in an increase in dark activities by Russian-owned oil products in the area in which the DPRK operates its mother vessels. This might suggest that Russian vessels may also deliver oil in ways other than arriving at DPRK ports.
• In recent years, the DPRK has started using more elaborate methods of receiving and delivering oil products to the DPRK, such as use of location manipulation, facilitator vessels, multiple STS engagements, and even converting cargo vessels to tankers. It is possible that Russian vessels might deliver oil to the DPRK via more than one method. By using Windward’s technology, it is possible to research and learn these methods.

Which Flags are Iranian Ships Using to Evade Sanctions? 

The registration of ships (flagging) is a crucial aspect of a vessel’s identity and flag states are responsible for monitoring vessels’ compliance with international standards and laws. Vessels might register in the state to which they are linked, or use open registries, commonly known as “flags of convenience.” 

• According to the International Maritime Organization, as well as laws dictated by the European Union, any ship can be banned from ports, and transfer of flag (reflagging) does not revoke or shorten a ban. While flags of convenience and reflagging have been around for decades, more recently ship-owners have been using these practices to evade sanctions and port bans worldwide, such as in the case of the Russia-Ukraine War.
• Windward data shows that between November 2023 and January 2024, there has been significant increase in reflagging conducted by high/moderate/sanctioned vessels related to Iran. Data shows that between November 2023-January 2024, there was a 206% increase in MMSI changes, an indication that vessels might have changed their flag. Compared to the previous year, which showed a 31% decrease, it is possible that the increase between November 2023-January 2024 is a result of recent sanctions put into place against Iranian individuals and companies by the U.S. Department of Treasury.
• The month of January 2024 marks the highest number of high/moderate compliance risk or sanctioned vessels that changed their MMSI numbers compared to the previous two years.

_{MMSI changes by high/moderate compliance risk or sanctioned vessels related to Iran, January 2022-April 2024}

• When examining the vessels that changed their MMSI between November 2023-April 2024, data shows that the majority of vessels that changed their MMSI, and consequently changed their flag were cargo vessels (56%) and tankers (26%).
• In addition, when examining the cargo and tanker vessels, data shows that the majority of vessels changed their flags since November 2023 to the flags of  Comoros (46%), Sierra Leone (6%), Guyana (6%), Eswatini (formerly Swaziland, 5%) and Tanzania (5%). While Comoros, Sierra Leone, and Tanzania are known flags of convenience to evade sanctions, the flags of Guyana and Eswatini are new. 

Looking at the general trend of vessels reflagging to the flags of Guyana and Eswatini, data shows that in the last year the only MMSI changes match the trend of the vessels that are related to Iran, showing that the use of these two flags by new vessels is mostly driven by the vessels affiliated with Iran. They are classified as high/moderate compliance risk vessels or sanctioned vessels by Windward.

• Windward’s Maritime AI™ platform shows that the majority of vessels that changed their flags to the flags of Eswatini and Guyana and were related to Iran executed the flag change since the beginning of 2024, showing a new trend of using these new flags to evade sanctions. 
• As of May 2024, there are 12 vessels affiliated with Iran, classified in the Windward Compliance System as sanctioned or high risk, flying the flags of Guyana and Eswatini.

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