Some of the world’s biggest oil traders are seeking permission from the US government to return sanctioned tankers to service, as a global vessel shortage pushes oil transportation costs to unprecedented levels.
Trafigura, Vitol, Mercuria and Abu Dhabi National Oil Company (ADNOC) are negotiating with US officials for licences to purchase or lease blacklisted oil tankers, Bloomberg reported.
The talks involve about 50 vessels currently under US sanctions. Treasury officials are said to be considering approvals on a case-by-case basis, although no decisions have been finalised.
The proposal comes after months of shipping disruptions stemming from the Iran war, which has forced tankers onto longer routes, increased insurance costs and tied up vessels in inefficient transfers around the Strait of Hormuz.
The cost of chartering a supertanker from the US Gulf Coast to China, according to the report, reached nearly $80 million in October, roughly 10 times the average rate before the conflict.
Valero estimated last month that shipping US crude to Asia had reached $30 to $35 per barrel, compared with about $5 a year earlier.
The soaring costs have already affected trade flows. Asian orders for US crude for November delivery fell roughly 50 per cent in October, potentially pushing shipments to their lowest level in seven years.
According to the report, adding sanctioned vessels could relieve some of that pressure.
US Energy Secretary, Chris Wright, said last month that Washington was exploring arrangements allowing investors to acquire and refurbish blacklisted tankers for transporting legitimate oil cargoes.
As of November 4, US sanctions covered 1,568 ships, including 462 crude tankers, according to Treasury data compiled by Bloomberg.
But the potential benefit depends heavily on which vessels receive approval. Restoring previously idled tankers would add actual shipping capacity, while simply legalising vessels already transporting sanctioned oil would do considerably less to ease the shortage.
Many blacklisted tankers are also ageing vessels requiring repairs, inspections and insurance before entering conventional commercial service.
The report however stated that US authorisation would not automatically remove restrictions imposed by the European Union (EU) or Britain.
Emmanuel Addeh
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