Oil Traders Ask Washington to Let Them Use Sanctioned Tankers
Oil traders want to put some sanctioned tankers back to work. They hope more ships will ease a vessel shortage and bring prices down.
Who is asking
People with knowledge of the matter say at least four companies are in talks with US officials. They are Trafigura Group, Vitol Group, Mercuria Energy Group and Abu Dhabi National Oil Co. All want licences to buy or lease ships on the US blacklist. The companies declined to comment.
Roughly 1,600 ships are under US sanctions, and the talks concern about 50 of them. The applications include supertankers, which can carry 2 million barrels. Treasury officials are reviewing them and may approve requests one at a time, not through a blanket exemption. Nothing is settled, and it is not known when approvals might come.
Why the ships are wanted
Oil prices spiked after the US and Israel launched their war on Iran, which caused what the report calls the worst supply disruption in history. Freight rates reached a record in recent weeks amid tanker shortages and the risks of sailing through the Strait of Hormuz. Charterers also face higher insurance fees.
Shipping a cargo of US oil to Asia by supertanker cost nearly $40 a barrel in early October, up from $5 a year earlier. Rates have eased since, but they remain near historical highs. Oil is hovering around $100 a barrel.
In October, US Energy Secretary Chris Wright said the administration was working with investors who buy idled sanctioned tankers, refurbish them and move non-sanctioned oil. He described the aim as turning "dark tankers to legitimate tankers."
Limits and open questions
Any licence from the Treasury or its Office of Foreign Assets Control would cover only ships sanctioned by the US. The European Union and the UK have imposed their own restrictions on Russian and Iranian oil and have targeted the "shadow fleet."
Washington has already tried other ways to cut energy costs for American consumers. It has drawn down emergency stocks by millions of barrels and set aside some fuel-related laws. Pump prices are still high.
It is also unclear how far the move would cut prices. The effect would depend on which ships are brought back. One of the people said that reviving long-idled tankers, such as the Skipper, which has sat off Texas since December, would help more than relabelling vessels already operating in the dark fleet.
Most sanctioned ships are older than the mainstream fleet, so maintenance and safety are a worry. They could still serve short routes, for example on runs linking the US with the Caribbean or Latin America. That would free newer tankers for long-haul voyages.
The administration faces a balancing act. It wants more shipping capacity and lower prices, but it also wants to stop bad actors from receiving an influx of cash. As of 4 November, there were 1,568 ships under US sanctions, including 462 crude oil tankers. Most of these ships are hard for regulators to follow, as operators usually turn their satellite tracking off.
Source: gCaptain