The United States is considering easing sanctions on vessels linked to Russia, Iran and Venezuela as the administration seeks to reduce record-high global freight rates and facilitate the movement of oil and petroleum products, a US official said on Wednesday.
The discussions follow President Donald Trump’s temporary relaxation of sanctions on Russian diesel fuel, a decision that attracted criticism from Ukrainian President Volodymyr Zelenskyy, European countries and some Republican lawmakers in the US Senate.
Critics argued that the move could benefit Russian President Vladimir Putin by providing Moscow with additional revenue to finance its ongoing war in Ukraine.
The latest proposal would allow vessels already under US sanctions to transport crude oil and petroleum products that are not prohibited under American restrictions. However, shipments of Russian and Iranian oil that remain subject to US sanctions would not be covered by the proposed arrangement.
The US official said the initiative aims to increase the movement of crude oil and refined petroleum products from the Gulf to international markets.
US Energy Secretary Chris Wright reportedly discussed the possibility of easing restrictions on shadow fleet vessels during a video address to the World Petroleum Congress in Riyadh this week. According to energy research firm Energy Aspects, the administration is considering the measure as a way to reduce record freight rates that have weakened demand for US crude oil.
Parts of Wright’s remarks circulated on social media. However, Reuters reported that it could not obtain the complete video or a transcript of the address. The Department of Energy also said the full recording was unavailable.
The US official explained that companies seeking to use the sanctioned vessels would need to apply to the Treasury Department for authorisation.
The Department of Energy maintained that easing restrictions on shadow fleet tankers would not help Russia transport oil or petroleum products. Meanwhile, the Treasury Department referred questions about the proposal to the energy agency.
Nevertheless, the administration’s efforts to facilitate Russian diesel shipments to international markets could increase pressure on government agencies to authorise certain cargoes carried by the affected vessels.
The White House did not immediately respond to a request for comment.
High oil and fuel prices pose a political challenge for Trump ahead of the November 3 midterm elections, as Republicans seek to retain control of both chambers of Congress. The president’s temporary relaxation of sanctions on Russian diesel is scheduled to remain in effect through April 7, according to the report.
Tanker freight rates have surged to record levels as conflicts involving Iran and Ukraine have disrupted global energy markets and contributed to inflationary pressures. Rising shipping costs have also made US crude oil less attractive to some Asian refiners, prompting them to explore alternative supplies from the Middle East and Latin America.
In a note to clients, Energy Aspects said easing restrictions on shadow fleet vessels was unlikely to produce a substantial reduction in freight rates, although the move could facilitate additional oil shipments across the Middle East.
The research firm added that lifting the restrictions would not immediately introduce significant additional capacity into the mainstream tanker market. It noted that many vessels sanctioned because of their links to Russian or Venezuelan oil had continued operating over the preceding three months.
However, relaxing the measures could make a limited number of additional tankers available for shuttle operations through the Strait of Hormuz, a strategic waterway between Iran and Oman.
Maritime industry sources said lifting US sanctions alone would be unlikely to bring about a broad decline in freight rates because shipping insurers would remain subject to European Union and United Kingdom regulations. These restrictions could limit the overall impact of any changes introduced by Washington.
Goodness Anunobi
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