Trump Administration Weighs Easing Sanctions on Selected Tankers
The administration is considering allowing approved buyers to acquire selected sanctioned tankers and return them to mainstream commerce. The proposal remains under discussion; tanker shares and freight rates have weakened as markets weigh the potential impact on vessel availability.
A surge in global freight rates has supported tanker operators DHT Holdings Inc. (NYSE: DHT), Frontline plc (NYSE: FRO) and International Seaways Inc. (NYSE: INSW). That support may come under pressure as the Trump administration considers easing sanctions on selected shadow-fleet vessels, potentially adding ships to the pool competing for mainstream cargoes.
Analysts, however, question whether enough usable vessels would be released to materially reduce tanker rates. The administration is weighing whether to let legitimate buyers purchase selected sanctioned tankers and return them to mainstream trade carrying non-sanctioned crude and petroleum products. Transactions involving the vessels would require U.S. Treasury Department approval, Reuters reported.
A Treasury official said the aim was to remove vessels from the shadow fleet “for use in legitimate global commerce.” The proposal is still under discussion, but markets have already reacted. Tanker shares and a tanker-freight ETF finished the week lower, while supertanker rates eased as investors assessed the possible sanctions relief and weaker shipping demand. Bermuda-based DHT (NYSE: DHT) lost 4.2% in the week ended Oct. 16.
Cyprus-based Frontline (NYSE: FRO) fell 6.4%, while New York-based International Seaways (NYSE: INSW) declined 8.2%. In Asia, Chinese tanker stocks, including COSCO Shipping Energy Transportation and China Merchants Energy Shipping, led the declines after the reports. The Breakwave Tanker Shipping ETF (NYSE: BWET) dropped 9% to $907.84 on Thursday, then fell another 0.98% to $898.97 on Friday. It tracks crude-oil tanker freight futures, not shipping-company shares, and was down approximately 9.95% for the week.
Lloyd’s List separately reported that forward freight assessments had weakened amid expectations of greater vessel availability. High Rates Lift Earnings The U.S.-Israeli conflict with Iran disrupted oil transport, tying up vessels and pushing tanker freight rates to record levels on key routes. Ship-to-ship transfers to move oil out of Hormuz added to tanker demand and supported the industry’s earnings boom. Vitol’s Asia head, Kieran Gallagher, said producers were paying higher freight rates and more risk premiums to move cargoes out of Hormuz.
DHT Holdings reported Monday that Estimated fleet-wide time charter equivalent earnings for the third quarter increased to $141,300 per day, up from $40,500 per day in the year-earlier period. The measure represents shipping revenue after voyage expenses and does not reflect corporate net profit. DHT’s preliminary fourth-quarter bookings indicate higher daily earnings. By Oct.
12, about 78% of available revenue days across spot and time-charter operations had been fixed at an estimated average of $225,200 per day. Frontline also reported strong earnings amid elevated tanker rates in August. International Seaways is increasing its exposure to crude tankers. On Friday, it announced agreements to acquire Bruton Ltd in transactions that value Bruton at approximately $370 million.
The proposed deal would add four very large crude carriers (VLCCs), including newbuildings, to a diversified fleet of about 70 vessels. International Seaways President and CEO Lois K. Zabrocky said Seaways would remain positioned to pursue its growth strategy, generate attractive returns and create long-term value for shareholders. International Seaways also reported preliminary third-quarter blended spot earnings The figure was about $68,000 per day, up from $29,000 a year earlier but below the second quarter’s $79,000.
In its Friday announcement, International Seaways said it had fixed about 37% of expected fourth-quarter revenue days at blended spot rates averaging about $180,000 per day. ### Can Relief Unlock Ships? Sparta Commodities analyst Michael Ryan told Reuters that comments from the administration about potentially removing sanctions on some shadow-fleet tankers had pushed freight rates lower, as relief would increase the number of ships available to transport oil. Kpler freight analyst Matthew Wright said demand on the Gulf of Oman-to-China route had weakened after fresh attacks.
Higher Middle East Gulf freight rates and lower export volumes had reduced tanker demand on the route, he said. Baltic Exchange data cited by Reuters on Friday showed rates for VLCCs carrying oil from the Gulf of Oman to China had fallen to about 776 on the Worldscale pricing system, from 841 the previous week. The earlier reading was the series’ highest since it launched this year. Research published on Friday by the Centre for Research on Energy and Clean Air highlights a distinction: sanctioned tankers are not necessarily The vessels were idle.
The group found they carried 57% of Russia’s seaborne oil in September. Bringing them back into mainstream commerce could redirect ships from other trades, rather than add an equivalent amount of global capacity. Kpler, a ship-tracking firm, estimates about 160 supertankers are under U.S. sanctions, equal to about 22% of the commercial fleet.
After adjusting for age and excluding vessels owned by Iran’s National Tanker Company, only about 24 might be able to return to global trade. Some shadow-fleet vessels do not have class certificates verifying that they meet technical, safety and environmental standards. Others lack credible international insurance. Sanctions imposed by other countries could also remain a barrier even if the U.S.
provides relief. For tanker-stock investors, the issue is whether sanctions relief could make blacklisted vessels credible competitors for mainstream cargoes. Any added competition would need to be considered alongside the disruption already supporting freight rates and the revenue operators have already locked in.