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London-listed shipbroker Braemar closed down 6 per cent on Thursday, the biggest one-day drop in more than a year, after the Financial Times reported its involvement in the sale of nine ageing oil tankers that have joined Russia’s “shadow fleet”.
Braemar’s shares ended the day at 278p, the lowest since May, and were down another 7 per cent per cent to 258p in early trading on Friday.
London has been a global centre of the maritime industry for centuries, and Braemar, founded in 1982, is one of the sector’s leading brokers, matching buyers and sellers of vessels in return for a percentage of the purchase price.
Since the first western restrictions on Russian oil exports were introduced in December 2022, Moscow has assembled a so-called shadow fleet of more than 400 such vessels that are at present moving about 4mn barrels of oil a day beyond the reach of the sanctions and generating billions of dollars a year in additional revenue for its war in Ukraine.
Most of those tankers were bought from western sellers but the use of offshore ownership structures has meant western officials have struggled to identify how the ships were acquired and who owns them now.
The FT reported on Thursday that at least 25 of the vessels in the shadow fleet had been purchased by a British accountant on behalf of Eiger Shipping DMCC, the Dubai-based shipping arm of Russia’s second-largest oil producer. Eiger had financed the acquisitions by paying in advance to charter the vessels, the FT reported.
The accountant’s lawyers, and one other person familiar with the matter, told the FT that Braemar was fully aware the vessels were being acquired for, and financed by, Eiger.
Braemar confirmed it had served as the broker for at least nine of the purchases but declined to comment on its knowledge of Eiger’s involvement.
“For every transaction that Braemar considers undertaking, it conducts all appropriate due diligence with know-your-customer checks, legal, compliance and regulatory adherence,” it said in a statement. Braemar on Friday said it had no further comment.
It is not alleged that the transactions have broken any laws. Although Lukoil has been under US sanctions since 2014, neither Eiger Shipping DMCC nor its Dubai-based owner Litasco Middle East DMCC, is a sanctions-hit entity. Dubai-based companies are also not required to comply with the west’s restrictions if they do not use G7 financing or services.
However, individuals and companies that have helped to assemble and operate the shadow fleet are increasingly in the crosshairs of western governments. At least seven of the 25 vessels originally acquired by the British accountant have since been hit with sanctions by the UK or EU, as have two companies that previously managed many of the ships.
In a call to action in July 44 European leaders, including UK Prime Minister Sir Keir Starmer, pledged to target the shadow fleet’s “ships and facilitators” and called for the support of the maritime industry, including ship brokers.