US Energy Secretary Outlines Plan to Convert Sanctioned Oil Tankers into Legitimate Fleet
US energy secretary Chris Wright has announced plans to convert some of the country’s sanctioned oil tankers, known as the “dark fleet,” into legitimate vessels that can transport non-sanctioned oil. This move is expected to increase the pool of available tankers and help shore up supply chains affected by the war in the Middle East and the shutdown of the Strait of Hormuz.
According to Wright, the sanctioned tankers, numbering “dozens to hundreds,” will undergo a process to change their status from being part of the “bad-guy fleet” to the “good-guy fleet.” This conversion will require an approval process, during which the tankers must meet certain standards and regulations. The goal is to add dozens or even hundreds of new tankers to the legitimate fleet.
Wright emphasized that this move does not involve lifting sanctions on Russia or any other country. Instead, it is a way to increase the availability of tankers for transporting non-sanctioned oil while maintaining the current sanctions regime. He also noted that the global “dark fleet” numbers around 1,600 vessels and that the effort could ultimately add significant capacity to the legitimate tanker fleet.
Shipping Costs and Supply Chain Impacts
The conversion of sanctioned tankers into legitimate vessels is expected to have a meaningful impact on shipping costs over time. However, Wright acknowledged that it will take some time for the effects to be fully realized. In the meantime, the increased availability of tankers could help alleviate supply chain disruptions caused by the war in the Middle East and the shutdown of the Strait of Hormuz.
The Strait of Hormuz has been a critical route for global energy supplies, but the conflict has sharply increased the cost and risks of moving oil through this vital chokepoint. The perils of transporting oil through the strait have sent shipping fees skyrocketing, making it more expensive to move oil around the world.
Russian Diesel Supplies and Incentivizing Peace
In addition to converting sanctioned tankers into legitimate vessels, Wright also defended the administration’s decision to work with Russian president Vladimir Putin to release Russian diesel supplies onto global markets. The arrangement is intended to give Russia an incentive to end the war in Ukraine by allowing them to export surplus diesel fuel.
According to Wright, if Russia can produce more diesel than it consumes, it can export it to the world. This would provide a financial incentive for Russia to end its involvement in the conflict and focus on rebuilding its refineries or reducing its consumption of diesel for war fighting activities. The goal is to achieve an “energy ceasefire” with Ukraine, which would allow Russia to fix its refineries and reduce its reliance on diesel fuel.
Trump recently announced a deal with Putin to supply over 300,000 tons of diesel fuel to the American and global marketplace, with plans to deliver 500,000 tons in November and 1,000,000 tons shortly thereafter. The administration hopes that this arrangement will provide an incentive for Russia to end its involvement in the conflict.
Ukrainian President’s Response
Ukrainian president Volodymyr Zelenskyy has criticized proposals to ease or postpone sanctions on Moscow, calling them a “denial of reality” as strikes continue. In a statement on X, Zelenskyy wrote that blocking missile supplies for Ukraine’s air defense while Russia receives sanctions relief or delays is a denial of reality.
The conflict in Ukraine and the shutdown of the Strait of Hormuz have had significant impacts on global energy supplies, making it more expensive to move oil around the world. The conversion of sanctioned tankers into legitimate vessels and the release of Russian diesel supplies are part of the administration’s efforts to increase the pool of available tankers and alleviate supply chain disruptions.
Original Article: US mulling deals to convert sanctioned oil tankers into legal fleet — Shippingtelegraph