U.S. weighs easing shadow fleet sanctions to expand tanker capacity

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U.S. weighs easing tanker sanctions

Highlights

The U.S. is considering easing sanctions on shadow fleet tankers linked to Russia and Iran by allowing blacklisted vessels to be sold to legitimate operators, aiming to increase global shipping capacity.
U.S. consumer prices rose 3.7 per cent in September, driven by elevated diesel prices averaging $6.31 a gallon and continued warnings of global shortages from the International Energy Agency until mid-2027.
Analysts from Energy Aspects estimate 13–19 per cent of the world's tanker fleet is under U.S. sanctions but highlight that vessel age and prevailing war risks limit the impact of sanctions relief on shipping capacity and fuel prices.

Sanctions relief options tied to tanker supply

As first reported by Financial Times, the U.S. is considering steps to ease restrictions on so-called shadow fleet tankers linked to Russia and Iran as officials try to lower freight costs that are feeding into fuel prices.

The measures under discussion include allowing blacklisted vessels to be sold to legitimate operators and removing sanctions so they can re-enter global shipping without restriction. Chris Wright, the U.S. energy secretary, raises the idea earlier this week at the World Petroleum Conference in Riyadh, Saudi Arabia, according to people present at the event.

A Treasury Department official says the Office of Foreign Assets Control may consider authorising the sale of shadow fleet vessels to legitimate buyers and removing sanctions on those ships on a case-by-case basis. The official says such transactions would not benefit the shadow fleet itself, but would instead shift vessels into legitimate commercial use after a review process.

Jeremy Paner, a partner at Hughes Hubbard in Washington, says facilitating the purchase of sanctioned tankers could help the administration avoid the optics of issuing new Russia-linked authorisations directly. The White House and the Energy Department do not reply to requests for comment.

Fuel price pressure and political fallout

The policy review comes as inflation data this week shows U.S. consumer prices rising 3.7 per cent in September, with higher fuel costs adding pressure across the economy. Diesel prices remain elevated at an average of $6.31 a gallon on Thursday, just below a recent record of $6.53, while the International Energy Agency warns of a global shortage lasting until the middle of 2027.

The administration has already pushed allies to release more diesel on to the market, threatened an export ban and allowed tax-free red diesel to be used on public roads. Trump also says last week that he will temporarily lift sanctions on Russian diesel fuel, drawing criticism from European allies and bipartisan U.S. senators.

Analysts say any easing of tanker sanctions is likely to have only a limited effect on prices. Energy Aspects estimates that 13 per cent to 19 per cent of the world's tanker fleet is under U.S. sanctions, but says the age and condition of many vessels would constrain any immediate increase in mainstream shipping capacity. Kpler also says the measure would have virtually no effect on the current tanker crunch because fuel prices are being driven mainly by war risk in the Middle East rather than vessel shortages alone.

The debate is also stirring concern among U.S. and European politicians over a softer approach toward Moscow. On Wednesday, Italian Prime Minister Giorgia Meloni criticises Trump's plan to buy diesel from Russia, calling it a very risky choice that weakens international pressure on Vladimir Putin over the war in Ukraine.

In our earlier report on the conflict-driven surge in crude shipping costs, we detailed how attacks and rerouting around key chokepoints pushed tanker rates to record levels, making freight a much larger share of the delivered oil price. We also noted that higher transport and insurance costs can quickly filter through to gasoline and broader consumer inflation, while creating windfall earnings for tanker owners and squeezing import-dependent buyers.

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