US Lifting Sanctions on ‘Dark Fleet’ Not Expected to Solve Tanker Crisis
The US decision to lift 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.
Sanctions Relief May Provide Some Relief, But Won’t Solve Crisis
The administration of US President Donald Trump this week authorized the sale of sanctioned oil tankers in a move to allow the vessels to start legitimately shipping crude and ease pressure on oil prices that have surged since the outbreak of Iran war in February. However, according to Salih Yilmaz, senior industry analyst of energy at Bloomberg Intelligence, “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.”
Risk of Operating Around Hormuz Remains Major Constraint
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.
US Government Working with Investors to Refurbish and Reuse Sanctioned Tankers
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.”
Analysts Not Optimistic About US Move Increasing Tanker Availability
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.”
Original Article: US lifting sanctions on ‘dark fleet’ not expected to solve tanker crisis — Thenationalnews