Is the oil shadow fleet growing because of sanctions?

The shadow fleet of oil tankers has expanded following a slew of Western sanctions on Russia over its war in Ukraine, major trading house Trafigura's chief economist, Saad Rahim, said on Monday.

The shadow fleet is playing a key role in keeping Russian crude flowing to buyers despite the sanctions, targeted at curbing Moscow's oil revenues.

"As there are more sanctions and restrictions, the size of the (shadow fleet) has grown even larger," Rahim told the APPEC 2025 conference.

The shadow tanker fleet has grown more slowly this year, but the fleet continues to expand as new vessels frequently replace those that are blacklisted.

Meanwhile, Rahim said that US tariffs so far have had a limited impact on the global economy and fuel demand.

"The key story with tariffs is that we actually haven't seen the impact yet on the demand side," said Rahim, adding that there has not been enough time for the August 1 tariffs to really show up on the demand side.

"Companies in the US have had pre-tariff inventory that they have then been able to draw down at prices that they have not had to pass through to the consumer just yet," he added.

Rahim said producers are setting their capital expenditure budgets in the next few months in view of the $60 per barrel mark for oil prices, which is the breakeven level.

On supply, the number of US oil rigs has also declined, with production expected to stall at current levels.

"If you look at the number of rigs, we have gone down by about 25 per cent right now," said Rahim, adding that there is a time lag for the lower rig count to affect production.

"While you won't see the drop (in production) yet because there is a six to eight months' lag, I think you are going to see production start to stall at these levels and then potentially come down," he said.

(Reporting by Florence Tan and Jeslyn Lerh; Editing by Sonali Paul)