Lifting sanctions on “dark fleet” or shadow fleet vessels is not expected to solve the tanker crisis engulfing oil markets while the Iran war continues and owners remain wary of sailing through the Strait of Hormuz and risking crews' safety.
The US move “could provide some relief, particularly around the Arabian Gulf where tanker availability has been strained, but I wouldn't expect it to solve the current tanker crisis”, said Salih Yilmaz, senior industry analyst of energy at Bloomberg Intelligence.
Donald Trump's administration this week authorised the sale of sanctioned oil tankers in an move to allow the vessels to start legitimately shipping crude.
“A large share of sanctioned vessels appears to be already operating in Russian, Iranian or other restricted trades rather than sitting idle, so sanctions relief would mainly redistribute existing capacity into mainstream markets,” Mr Yilmaz added.
Another big constraint is ship owner’s reluctance to operate in the Arabian Gulf as attacks on tankers continue, killing and injuring crew members.
There have been 120 confirmed attacks on ships as of October 22, with 22 seafarer fatalities since the war began in February, according to the latest update from the International Maritime Organisation.
Tanker owners are paying as much as $100,000 per month to ship's captains, along with a bonus of $50,000 for each trip, because of risks involved in sailing through the Strait of Hormuz, according to a recent Financial Times report.
“The bigger constraint today is the risk of operating around Hormuz. Owners are demanding very high compensation for exposing vessels and crews to attacks,” Mr Yilmaz said.
The US government is working with investors who buy idled sanctioned tankers, refurbish them and use them to transport non-sanctioned oil, US Energy Secretary Chris Wright said at an event in New York this week.
“We’re going to move some of the ships from what I call the ‘bad-guy fleet’ to the ‘good-guy fleet,’ Mr Wright said. “They will not carry sanctioned oil any more.”
Wanying Zhang, a freight analyst at Vortexa, was also not optimistic about the US move increasing tanker availability in the markets.
“Our analysis suggests that any easing of OFAC [Office of Foreign Assets Control] sanctions is unlikely to trigger a significant return of sanctioned tankers to mainstream trades,” she said.
“A substantial share of OFAC sanctioned tankers remain subject to UK or EU sanctions, which could continue to restrict their access to European trades even if US restrictions are lifted.”
OFAC is a financial intelligence and enforcement agency of the US Treasury Department that administers and enforces economic and trade sanctions based on US foreign policy and national security goals. It has been imposing sanctions on vessels linked to Iran and Russia for carrying crude to global markets.
The relatively old age of these vessels could also delay their return to mainstream trade, given potential maintenance, inspection, insurance and commercial requirements.
About 70 per cent of OFAC-listed tankers are at least 20 years old which limits the number likely to be accepted by mainstream charterers, analysts added.