US shadow fleet plan crashes tanker stocks: 17% of global tonnage at stake
Washington mulls easing sanctions on 1,010 blacklisted tankers to tame record freight rates
Asian shipping stocks suffered steep losses on Thursday after reports emerged that the U.S. is weighing a relaxation of sanctions on so-called shadow fleet tankers. The proposal, aimed at easing record-high freight rates, triggered a sell-off in major energy transport companies.
COSCO Shipping Energy’s shares in Hong Kong dropped more than 13%, while China Merchants Energy Shipping and China Merchants Nanjing Tanker both hit their 10% daily trading limits in Shanghai. The decline extended beyond tanker stocks, affecting broader shipping sectors as investors reassessed the outlook for freight markets.
The market reaction followed reports that the Trump administration is considering exemptions allowing blacklisted vessels—linked to Russia, Iran, and Venezuela—to transport oil and petroleum products not subject to U.S. sanctions. Under the proposal, companies would need Treasury Department approval to use these tankers. The move is intended to increase available fleet capacity and reduce freight costs, which have surged to unprecedented levels, with some spot segments reaching million-dollar rates for the first time.
COSCO Shipping Holdings
Limited impact on tanker supply expected: shadow fleet sanctions
Despite the market turbulence, analysts doubt the proposal will meaningfully ease the tanker shortage. According to Clarksons Research, 1,010 oil tankers—representing 17% of global capacity—are currently under sanctions. However, most of these vessels are older and already operating in restricted trades, making them unlikely candidates for mainstream use.
Scandinavian bank SEB noted in a client briefing that while a small number of additional tankers could help move more oil, particularly in the Hormuz shuttle trade, the overall effect on supply would be minimal. The bank also highlighted that major oil companies and insurers are unlikely to engage with vessels that were recently under sanctions due to reputational and operational risks.
Becky Smart, a research analyst at Singapore’s Sentosa Shipbrokers, questioned both the political and practical viability of the proposal. She warned that lifting sanctions on Russian-linked vessels could undermine efforts to restrict Moscow’s energy revenues. “Major oil companies and most entities aligned with the EU or UK are highly unlikely to charter vessels that were sanctioned until recently,” she said. European and British sanctions would remain in place regardless of any U.S. decision, further limiting the potential for these tankers to re-enter conventional trades.
Political pressures drive the proposal
The timing of the U.S. move appears tied to domestic political concerns. With midterm elections approaching in November, high fuel prices pose a risk for the administration. U.S. Energy Secretary Chris Wright suggested during a video address to the World Petroleum Congress in Riyadh that the proposal could shift vessels from “the bad-guy fleet to the good-guy fleet,” though he did not elaborate on how this would be achieved.
However, the initiative follows Washington’s recent decision to temporarily authorize Russian diesel trade until April 2027, a move that drew criticism from Kyiv and U.S. lawmakers. Analysts remain skeptical that the sanctions relief will provide lasting relief to freight markets, given the age and condition of most sanctioned vessels, as well as ongoing geopolitical tensions.
Smart concluded that while the proposal may appear to add tonnage on paper, “in practice, it is unlikely to add genuinely usable fleet capacity.”
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