US Considers Easing Sanctions on Shadow Fleet Vessels to Cut Freight Rates
The Trump administration is considering easing sanctions on so-called shadow fleet vessels that have transported oil and petroleum products from countries including Russia, Iran, and Venezuela, in an effort to reduce record-high global freight rates. This move comes days after President Donald Trump temporarily lifted sanctions on Russian diesel fuel, a decision met with criticism from Ukrainian President Volodymyr Zelenskiy, European countries, and some of Trump’s fellow Republicans in the US Senate.
The discussions center on the United States potentially allowing “legal oil” to flow on previously sanctioned vessels, meaning crude or petroleum products not sanctioned by Washington, rather than Russian and Iranian oil, which are under punitive measures. The goal is to get more refined products and crude out of the Gulf, according to a US official.
Sanctions Relief Could Cut Freight Rates
The Trump administration’s consideration of easing sanctions on shadow fleet vessels aims to reduce record-high global freight rates. Tanker freight rates have soared to record highs as the wars in Iran and Ukraine have stoked inflation and put US crude oil out of reach for Asian refiners, pushing them to seek alternatives from the Middle East and Latin America.
Energy Aspects, a research group, notes that easing the sanctions on the shadow fleet would not greatly impact freight rates but could allow more movement of oil in the Middle East. Lifting the sanctions on the tankers that are mostly old and not well maintained is “unlikely to add meaningful mainstream fleet capacity overnight,” according to Energy Aspects.
US Energy Secretary Weighs In
US Energy Secretary Chris Wright said in a video to the World Petroleum Congress in Riyadh this week that the administration was talking about easing the sanctions on shadow fleet vessels in an effort to cut record freight rates. The goal is to get more refined products and crude out of the Gulf, according to Energy Aspects.
Application Process for Sanctioned Vessels
Companies seeking to use the sanctioned vessels would have to apply to the US Treasury Department to use the vessels, a US official said. The Department of Energy said any move to relieve sanctions on the shadow fleet would not help Russia to move oil or oil products. The Treasury Department referred questions to the Department of Energy.
White House Response
The White House did not respond immediately to a request for comment. High oil and fuel prices are a risk for Trump in the November 3 midterm elections, in which Republicans are hoping to maintain control of both chambers of Congress. He lifted the sanctions on Russian diesel through April 7.
Original Article: US considers easing sanctions on shadow fleet vessels to cut freight rates — Jpost