Trump Administration Considers Relieving Sanctions on Oil Tankers
The Trump administration is considering removing sanctions from some oil tankers linked to Russia, Iran, and Venezuela to reduce shipping costs that have made American crude increasingly expensive for overseas buyers. A U.S. official told Reuters that the proposal would let approved buyers acquire previously sanctioned vessels and return them to commercial service carrying oil and petroleum products permitted under U.S. rules.
The discussions follow President Donald Trump‘s temporary suspension of sanctions on Russian diesel as prices continue to rise. That decision drew criticism from Ukraine, European countries, and Republican senators who said it would give Moscow additional revenue to finance its war. The vessel proposal remains under consideration.
Companies Must Seek Treasury Department Approval
Companies interested in purchasing sanctioned ships would have to seek Treasury Department approval. This move aims to ensure that only legitimate buyers acquire the vessels, which would then be used to carry “legal oil” as described by a U.S. official.
Energy Secretary Links Proposal to High Freight Rates
Energy Secretary Chris Wright discussed the possibility in a video address to the World Petroleum Congress in Riyadh, according to research firm Energy Aspects. He linked the proposal to exceptionally high freight rates that have weakened demand for American crude. Shipping costs have become a competitive disadvantage for U.S. producers.
Many Sanctioned Ships Continue Trading
However, removing U.S. sanctions would not automatically produce a large pool of additional tankers. Energy Aspects said many vessels targeted over Russian or Venezuelan connections had continued trading during the previous three months. Their removal from sanctions lists would therefore not necessarily represent new shipping capacity.
Condition and Insurance Limit Relief
The research firm also pointed to the ships’ condition. Many shadow fleet tankers are old and poorly maintained, limiting how quickly they could enter mainstream commercial service. It said relief might make a small number available for shuttle trips through the Strait of Hormuz, without substantially lowering freight rates worldwide. Insurance presents another obstacle as maritime industry sources told Reuters that insurers would remain subject to European Union and British restrictions, potentially limiting the benefits of a U.S. policy change.
Despite these challenges, the proposal remains under consideration, with the goal of moving more crude and refined products out of the Gulf. The Trump administration’s decision will have significant implications for the global oil market, particularly as it relates to American crude exports.
Original Article: Sanctioned Oil Tankers May Get a U.S. Reprieve from Trump. But Freight Costs Might Not Feel a Difference. — Yahoo