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 that have cut into demand for US crude, according to Energy Aspects, a research group. Bits of the talk were broadcast on social media, but Reuters was not able to obtain the full video or a transcript. The Department of Energy said it was not available.
The Department of Energy also said any move to relieve sanctions on the shadow fleet would not help Russia move oil or oil products. The Treasury Department referred questions to the relevant authority.
Why the fleet math is unforgiving
The scale of the current tanker squeeze is unusual. Clarksons Research estimates that 1,010 oil tankers totalling 121m dwt are individually sanctioned, representing 17% of global tanker capacity.
Analysts are sceptical that the proposed relaxation would significantly alter tanker supply. Energy Aspects notes that shadow fleet tankers are old and technically worn out, and would add little new capacity, as most have already been transporting oil continuously over the past three months. Maritime industry sources estimate the change could free up a small number of additional tankers for routes through the Strait of Hormuz, but say this is unlikely to lead to a general reduction in rates.