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Trump Eyes Sanctions Relief for Russian Shadow Fleet as Oil Freight Costs Surge
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The administration of US President Donald Trump is considering easing sanctions on vessels associated with the Russian so-called shadow fleet and other sanctioned oil shipments in an effort to reduce record-high global shipping costs, Reuters reported on October 14, citing a US official.
According to the official, discussions are focused on potentially allowing previously sanctioned tankers to transport oil and petroleum products that are not subject to US restrictions, rather than lifting sanctions on Russian or Iranian oil.
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The proposed measures are intended to increase the transportation of crude oil and refined petroleum products from the Gulf region, where rising freight rates have complicated global energy shipments.
US Energy Secretary Chris Wright reportedly addressed the proposal in a video message to the World Petroleum Congress in Riyadh this week, according to energy research firm Energy Aspects.
Wright said the Trump administration was discussing the possibility of relaxing restrictions on shadow fleet vessels to address record shipping costs, which have also weakened demand for US crude oil.
According to Reuters, companies seeking to operate previously sanctioned tankers would need authorization from the US Treasury Department, while the Department of Energy stressed that any easing of restrictions would not enable Russia to increase exports of its oil or petroleum products.
However, analysts at Energy Aspects expressed skepticism that the proposed changes would significantly reduce global freight rates. In a note to clients, the research firm said that lifting restrictions on shadow fleet tankers would be unlikely to substantially increase the number of vessels available for conventional oil transportation, particularly because many of the ships are aging and poorly maintained.
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The analysts also noted that most tankers sanctioned over their connections to Russia or Venezuela had continued operating during the previous three months, limiting the potential impact of removing restrictions.
Nevertheless, the proposed measures could facilitate additional oil shipments in the Middle East “could make a small number of additional tankers available for certain (Strait of) Hormuz shuttle runs,” the strategically important waterway between Iran and Oman, according to Reuters.
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The discussions come as the Trump administration has also announced a separate arrangement involving Russian diesel supplies to the United States and international markets. Trump said he had reached an agreement with Russian leader Vladimir Putin following what he described as an “extremely successful discussion” about increasing diesel shipments.
In a post on Truth Social, Trump announced that Russia would immediately supply more than 300,000 tons of diesel, followed by another 500,000 tons in November and 1 million tons shortly afterward. He added that Moscow would subsequently provide an additional 3 million tons as quickly as possible, taking into account the condition of Russia's diesel refineries.
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