The Daily View: Sanctions pragmatism collides with shadow fleet reality - Lloyd's List

Your latest edition of Lloyd’s List’s Daily View — the essential briefing on the stories shaping shipping

Richard Meade @Lloydslisted [email protected]

WHEN US Energy Secretary Chris Wright raised the prospect of easing sanctions on shadow fleet tankers at the World Petroleum Congress in Riyadh this week, even delegates were caught off guard.

His do not amount to policy, yet, and no detail has emerged. But Lloyd’s List has confirmed Wright’s first hand with delegates who heard him speak in the room. The logic was clear enough. With tanker rates at extraordinary levels, why leave potentially useful ships stranded on sanctions lists when Donald Trump wants more unsanctioned oil moving?

The problem is that removing a tanker from a US blacklist does not magically turn a 20-year-old shadow vessel into acceptable mainstream tonnage.

Sanctions relief does not make these ships safer, and allowing them back would send the “wrong signal” to owners that have invested heavily in safety, compliance and transparency.

Most major charterers will still baulk at elderly vessels lacking recognised class, International Group P&I cover or transparent ownership histories. UK and EU sanctions would remain. Banks, insurers and charterers would still have compliance concerns.

That considerably reduces the headline capacity potentially available.

US-sanctioned crude tanker tonnage amounts to almost 80m dwt, equivalent to 16% of the global fleet, while Lloyd’s List Intelligence identifies 1,470 tankers facilitating sanctioned Iranian, Russian and Venezuelan trades.

But theoretical tonnage is not commercially usable capacity. Fewer than 25 sanctioned VLCCs could realistically return to trade without further waivers or overcoming age-related barriers.

A more plausible application might be using rehabilitated vessels as Middle East Gulf shuttles, carrying unsanctioned crude through Hormuz for transfer to mainstream tonnage. Even that is unlikely to make a significant dent in freight rates while heightened Middle East war risk remains the primary driver .

The bigger issue is what the proposal says sanctions policy.

Washington has already temporarily loosened restrictions on Russian diesel in a deal that will do little to resolve the underlying causes of the diesel shortages.

Rehabilitating shadow tankers would take that flawed pragmatism considerably further, while putting the US increasingly at odds with European allies seeking to strand precisely the same fleet.

Europe is trying to undermine the shadow fleet’s business model. Washington is considering putting part of it back to work.

That contradiction points to an uncomfortable truth: when sanctions enforcement collides with energy security and inflation, priorities can change remarkably quickly.

Richard Meade Editor-in-chief, Lloyd’s List

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