US considering easing sanctions on shadow fleet – Reuters

The proposed change would let certain vessels previously placed under US sanctions transport “legal oil.” That means oil and petroleum products not covered by US restrictions. The plan matters because sanctioned ships are largely excluded from normal trade, while high tanker costs are reducing demand for US oil.

Companies would need to ask the US Treasury Department for permission to use an approved vessel. The US Energy Secretary said easing restrictions could reduce freight rates by adding more ships to the market. The effort is aimed at increasing shipments from the Gulf.

The proposal would not authorize Russian or Iranian oil. The US Energy Department said it would not help Russia move oil or petroleum products. Its effect may also be limited because many sanctioned ships are old, poorly maintained, or still restricted by European insurance rules.

The article does not give a formal definition of “shadow fleet.” In this context, it refers to tankers operating outside the mainstream shipping system and often associated with restricted oil trading. Such fleets can include vessels with unclear ownership, unusual registration, or limited access to major insurers.

Some vessels were sanctioned because authorities linked them to Russia or Venezuela. Sanctions can target a ship, its owner, or related services. Once listed, the vessel faces barriers to financing, insurance, port access, and chartering. That makes ordinary oil shipments harder to arrange.

The article notes that many sanctioned vessels are relatively old and generally in poor technical condition. This helps explain why simply removing a sanction may not create dependable capacity. The ship may remain difficult to insure, commercially unattractive, or subject to rules imposed by the European Union and United Kingdom.

The provided article does not state how much oil shadow-fleet tankers transport, either in barrels or as a share of the global tanker fleet. It therefore cannot support a precise comparison. The article focuses on a possible US sanctions adjustment, not the fleet’s global size or cargo volume.

A reliable comparison would need a defined measurement. Analysts might count ships, deadweight capacity, voyages, or barrels carried. They would also need to decide which vessels qualify as shadow-fleet tankers. Those choices can produce different results, especially when ownership, registration, and trading patterns are difficult to identify.

The article does establish that sanctioned vessels make up a potentially relevant shipping pool, but many are old and poorly maintained. It also says easing sanctions may not quickly expand usable capacity. Therefore, no defensible percentage can be drawn from this source alone.

In these discussions, “legal oil” does not mean every shipment that is lawful everywhere. It means oil and petroleum products that are not subject to US sanctions. The distinction matters because a sanctioned ship could potentially carry an allowed cargo without receiving permission to transport restricted Russian or Iranian supplies.

For example, a company might request approval to use a previously sanctioned tanker for oil shipped from the Gulf. The request would go to the US Treasury Department. The vessel’s permission would apply to the approved trade, not automatically to every cargo or destination.

Russian and Iranian oil would remain excluded because the article states that both remain under US sanctions. The US Energy Department also said any easing would not help Russia transport oil or petroleum products. The proposal is therefore presented as a shipping measure, not a broad rollback of oil sanctions.

Allowing approved vessels to carry legal oil could increase the number of tankers available for some trades. More shipping options could ease competition for vessels and reduce freight rates. Lower transport costs could make US oil more competitive abroad, supporting exports and potentially increasing Gulf shipments.

The key mechanism is permission to use ships that are currently excluded. Chris Wright said high freight rates have reduced demand for US oil. If approved vessels re-entered those trades, charterers might face less pressure when booking tankers. Cheaper transport could also reduce some costs passed through to fuel markets.

Still, lower fuel prices are not guaranteed or necessarily quick. The article says high oil and fuel prices create political risks for Trump, but it also warns that European and UK insurance rules may limit the savings. Old, poorly maintained ships could further weaken the effect.

Removing a US restriction does not automatically make a tanker ready for mainstream trade. The article says many vessels sanctioned over links to Russia or Venezuela are relatively old and generally in poor technical condition. Shippers may avoid them because reliability, safety, and maintenance remain concerns.

Insurance is another crucial barrier. Even if Washington permits a vessel to carry legal oil, insurers must still follow regulatory requirements in the European Union and United Kingdom. Without acceptable insurance, a tanker may struggle to secure charters, enter ports, or obtain normal financing. The ship would not function like ordinary mainstream capacity.

For those reasons, easing US sanctions may not quickly expand supply or significantly cut freight rates. Maritime industry representatives said the savings are likely to be limited. The proposal could still help particular shipments, but its broad effect depends on vessel condition, insurance access, and market demand.

Sanctions determine whether a ship, owner, cargo, bank, or service provider may participate in a trade. Ownership matters because a vessel can be restricted through links to a sanctioned person, company, country, or activity. The article identifies Russia and Venezuela as links behind some vessel sanctions.

Insurance connects these rules to the voyage itself. A charterer may obtain a US Treasury approval for a previously sanctioned ship, but insurers in the European Union and United Kingdom must still follow their own regulatory requirements. If coverage is unavailable, the cargo may not move through normal ports or financing channels.

International oil trade therefore depends on a chain of permissions and services. The cargo must be allowed, the vessel and ownership acceptable, and insurance and port arrangements workable. In this case, the US proposal covers legal oil only. It does not permit Russian or Iranian oil, and it may not create mainstream capacity quickly.