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US Moves to Convert Some Sanctioned Shadow Fleet Tankers Into Legal Oil Carriers
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The US is allowing some sanctioned oil tankers to begin a process that could return them to legitimate crude shipping, as the Trump administration looks to expand tanker capacity and ease pressure on energy prices, Bloomberg reported on October 19.
US Energy Secretary Chris Wright said investors could buy and refurbish idled, sanctioned vessels before using them to transport non-sanctioned oil.
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Russia has relied on its shadow fleet to evade sanctions and keep oil revenues flowing into the Kremlin’s war economy. The vessels have helped transport sanctioned oil and sustain revenue streams used to finance Russia’s war against Ukraine.
“We’re going to move some of the ships from what I call the ‘bad-guy fleet’ to the ‘good-guy fleet,’” Wright stated. “They will not carry sanctioned oil any more.”
Wright estimated that about 1,600 tankers currently operate as a part of Russia’s shadow fleet, adding that dozens or potentially hundreds could eventually return to legitimate trade, Bloomberg wrote.
The move comes as the administration seeks to reduce energy prices amid the prolonged closure of the Strait of Hormuz. Brent crude settled 0.48% lower on Monday at $109.30 per barrel, while West Texas Intermediate fell 0.61% to $98.42, according to Bloomberg.
However, shipping analytics firm Kpler estimated that only 24 of roughly 160 vessels sanctioned by the US Treasury Department’s Office of Foreign Assets Control could realistically return to mainstream trade once vessel age and ownership restrictions are taken into account.
“With war risk, rather than vessel availability alone, driving freight costs in the Middle East Gulf, sanctions relief risks delivering limited commercial benefits while weakening geopolitical leverage,” Kpler analysts wrote.
Wright rejected suggestions that the process amounted to lifting restrictions on vessels that would continue carrying sanctioned oil from Russia, Iran, or other countries targeted by US measures, Bloomberg reported.
“We are converting dark tankers to legitimate tankers,” Wright stated.
Meanwhile, France has been stepping up scrutiny of vessels linked to Russia’s shadow fleet. On October 13, French prosecutors opened a criminal investigation into the captain of the DF Peak tanker after an inspection found irregularities with its claimed Beninese flag, with authorities also examining the vessel’s ownership and operating structure.
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