Washington allows sanctioned tankers to be refurbished, with potential return estimated at 24 vessels

Key Facts

U.S. Energy Secretary Chris Wright said the administration was allowing investors to buy idled, sanctioned tankers and refurbish them to carry legitimate oil cargoes, in a move aimed at lowering shipping costs. His remarks came at a Citadel Securities event in New York, according to The National on 19 October 2026. Wright stressed the nature of the cargoes permitted once the vessels moved into legitimate trade, saying: "They will no longer carry sanctioned oil." Shipping data analytics firm Kpler estimated that only about 24 vessels could return to global trade, after accounting for vessel age and excluding tankers owned by the National Iranian Tanker Company. In a report cited by Reuters on 15 October, the firm forecast a "negligible" impact on the current tanker crisis, because lifting sanctions does not automatically translate into additional commercial capacity.

Shadow fleet tankers face operational hurdles involving the certification, insurance and maintenance needed to return to mainstream maritime trade, according to Reuters. The vessels concerned lack the certification required to conduct such business. They also face shortfalls in insurance coverage and the maintenance work needed to enter the mainstream shipping market. In the broader shipping market, rising war-risk insurance costs have helped push up tanker rates and reduce vessel availability. Adding to those pressures are attacks and complications in transporting oil through the Strait of Hormuz, which Reuters cited among the reasons for higher transport costs and reduced vessel availability.

The announcement of this approach was preceded by U.S. action to remove tankers from sanctions lists after changes in ownership and their departure from the shadow fleet. The U.S. Treasury Department announced in a statement dated 8 October 2026 that it had removed 2 vessels from the sanctions list. The department said the vessels had left the fleet and been sold to operators that were not subject to sanctions or were compliant with U.S. requirements. In the context of U.S. sanctions on Russia, President Donald Trump signed an executive order on Friday suspending a new sanctions package targeting the Russian economy, according to the Associated Press. Trump cited the national interest as the reason for suspending the package, the agency reported.

European restrictions, however, remain an obstacle to chartering some tankers even with U.S. measures eased, according to sanctions expert David Tannenbaum. Tannenbaum told Reuters that "EU sanctions remain in place" on tankers involved in the Russian oil trade. He added that the continued sanctions limit the vessels' appeal to charterers. Britain announced in a statement issued on 8 October 2026 that it had imposed sanctions on 12 additional tankers operating in Russia's shadow fleet. The additions brought the total number of tankers subject to British sanctions to more than 600, according to Britain's Foreign Office.

In the shipping market's reaction, Reuters reported on Thursday that forward freight agreements fell on news of a possible easing of sanctions on tankers. The impact of lower freight rates extended to the price spread between U.S. West Texas Intermediate crude and global benchmark Brent. The agency said the U.S. crude discount to Brent narrowed to about $10.42 a barrel as transport costs fell. The discount had reached $14.17 a barrel during the week of the report, when shipping costs rose. Reuters said those higher costs had weighed on U.S. oil exports and pushed the discount to that level.

The tankers' return remains dependent on obtaining the licences required to recover or sell them, procedures Tannenbaum said typically take months. He added that the process could stretch to years in some cases. The U.S. Treasury says U.S. transactions involving the property of blocked persons generally remain prohibited. Exceptions apply where an exemption or a general or specific licence issued by the Office of Foreign Assets Control provides otherwise. On the U.S. oil data calendar, the Energy Information Administration's weekly report is due at its usual time on Wednesday at 10:30 a.m. U.S. Eastern time.