Trafigura, Vitol and Mercuria in Talks to Return Sanctioned Tankers to Service

Freight rates for US-to-Asia crude shipments in supertankers climbed to nearly $40 a barrel in early October — eight times the $5 level of a year earlier — and that spike has pushed Trafigura, Vitol, Mercuria and Abu Dhabi National Oil Co. into talks with US officials to bring sanctioned tankers back into legitimate service.

The discussions cover roughly 50 of the approximately 1,600 ships currently blacklisted by the US government, according to people with knowledge of the matter. Treasury officials are reviewing applications and may issue authorizations on a case-by-case basis rather than a blanket exemption. No decision is final and the timeframe for approvals remains unclear. Representatives for ADNOC, Trafigura, Mercuria and Vitol declined to comment.

The applications include supertankers, the oil industry's largest vessels, each capable of carrying 2 million barrels, some of the people said.

Why are traders chasing blacklisted hulls?

The US and Israel launched their war on Iran, triggering what Bloomberg describes as the worst supply disruption in history. Tanker shortages and the risks of sailing through the Strait of Hormuz drove freight rates — a major component in the final price of oil — to record levels in recent weeks. Ships have taken longer voyages to secure supplies while charterers paid higher insurance fees.

Oil prices now hover around $100 a barrel. Although freight rates have softened from the October peak, they remain near historical highs, keeping pressure on a White House scrambling to contain energy costs for American consumers. Pump prices stayed stubbornly elevated and were a major contributing factor to the Republican Party's losses in this week's midterm elections.

US Energy Secretary Chris Wright outlined the administration's thinking last month, saying officials are working with investors who buy idled sanctioned tankers, refurbish them and redeploy the ships to carry non-sanctioned oil. The goal, he said, is to convert "dark tankers to legitimate tankers."

How many ships are actually affected?

As of Nov. 4, the US had sanctioned 1,568 ships, including 462 crude oil tankers, according to Treasury data compiled by Bloomberg. The talks target about 50 of them. Most sanctioned vessels remain beyond the reach of enforcement authorities and typically switch off their satellite location signals.

The profile of any rehabilitated ships matters for effectiveness. Repurposing tankers that were idled — such as the vessel named Skipper, sitting off the coast of Texas since December — would add more real capacity than simply changing the legal status of ships still operating in the dark fleet, one person said.

Most sanctioned ships are older than the mainstream fleet, raising concerns about maintenance and safety. Even so, they could serve short-haul routes such as the US to the Caribbean or Latin America, freeing newer tankers for long-haul voyages, the person added.

What are the limits of the plan?

Any licenses from the US Treasury or the Office of Foreign Assets Control would apply only to US-sanctioned vessels. The European Union and the UK maintain their own significant restrictions on Russian and Iranian oil, including measures targeting the "shadow fleet" used to circumvent curbs on Russian energy exports — meaning a US license alone may not make a vessel bankable for every trade.

How much the measure would lower prices is also uncertain. The Trump administration has already released millions of barrels from emergency reserves and waived some fuel-related laws in a series of attempts to pull energy costs down, with limited effect at the pump.

The administration's core dilemma is boosting shipping capacity and easing oil prices while preventing sanctioned operators from cashing in. With Treasury weighing case-by-case approvals and no timeline set, traders and charterers should expect relief from the roughly 50 candidate vessels — if it comes at all — to arrive gradually rather than as a fleet-wide reset of the 462 sanctioned crude tanker fleet.