Asian shipping stocks took a beating on Thursday as reports that Washington is considering easing sanctions on shadow fleet tankers sent investors scrambling to reassess the extraordinary freight boom that has sent some spot segments into million-dollar territory for the first time in history.
COSCO Shipping Energy plunged more than 13% in Hong Kong, while China Merchants Energy Shipping, COSCO Shipping Energy’s Shanghai-listed shares and China Merchants Nanjing Tanker hit their 10% daily downward limits in mainland trading.The sell-off also spread to other shipping sectors.
The sharp reversal followed reports that the Trump administration is discussing exemptions allowing blacklisted tankers linked to Russia, Iran and Venezuela to carry oil and petroleum products not themselves subject to American sanctions.
A US official told Reuters that companies would need Treasury approval to employ the vessels, with the initiative designed to release additional tanker capacity and bring down record freight rates. No formal easing has yet been announced.
US energy secretary Chris Wright raised the possibility during a video address to the World Petroleum Congress in Riyadh this week, according to consultancy Energy Aspects.
In practice it is unlikely to add genuinely usable fleet capacity
The proposal follows Washington’s decision last Friday to temporarily authorise Russian diesel trade until April 7, 2027, drawing criticism from Kyiv and US lawmakers.
The scale of today’s tanker squeeze is unprecedented. Clarksons Research estimates that 1,010 oil tankers totalling 121m dwt are individually sanctioned, representing 17% of global tanker capacity.
Analysts are sceptical that the proposed sanctions relaxation would significantly alter tanker supply.
Scandinavian bank SEB said in a note to clients this morning that any additional mainstream capacity would be limited, noting that most sanctioned tankers are elderly and already trading.
“A small number of additional vessels for the Hormuz shuttle trade could help get more barrels to market, which would be positive,” SEB observed.
The bank suggested the more significant development was Washington’s willingness to intervene in freight markets, with high fuel prices posing a political risk ahead of November’s midterm elections.
Becky Smart, a research analyst at Singapore’s Sentosa Shipbrokers, told Splash that Russian-linked tonnage appeared a more plausible candidate for sanctions relief than Iranian-controlled ships, given Washington’s continuing pressure on Tehran. However, she questioned both the political wisdom and the likely commercial effectiveness of the proposal.
“Removing sanctions from vessels previously targeted for involvement in Russian oil trades would unwind a significant amount of the work done to constrain Moscow’s energy revenues,” Smart said.
She also highlighted the practical difficulties of bringing ageing shadow fleet vessels back into mainstream employment.
“Major oil companies and most EU- or UK-aligned entities are highly unlikely to rush towards vessels that were sanctioned until five minutes ago,” she said.
Many would also struggle to meet the vetting, maintenance and insurance requirements of mainstream charterers and terminals. European and British sanctions would remain in force regardless of Washington’s decision, further restricting any return to conventional trading.
“On paper sanctions relief adds tonnage, however, in practice it is unlikely to add genuinely usable fleet capacity,” Smart concluded.
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Sam Chambers
Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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