Oil prices eased on Thursday after a report that Washington may loosen its grip on the so-called shadow fleet, the hundreds of ageing tankers, many of them blacklisted, that haul Russian, Iranian and Venezuelan oil. The thinking is simple. More ships on the water should bring down freight costs, which have hit records since attacks cut traffic through the Strait of Hormuz.
Brent crude traded at $104.76 a barrel around midday in Europe, down 1.2% on the day, after briefly slipping below $104. WTI shook off an early drop of more than 1% and was little changed at $95.24.
What is on the table
The administration is talking about allowing tankers that were blacklisted in the past to haul cargoes that face no US sanctions of their own, according to a US official quoted by Reuters. Russian and Iranian oil would stay off limits. Any company that wants to charter one of these ships would first need permission from the Treasury Department. The goal is to clear more crude and fuel from the Gulf.
Energy Secretary Chris Wright raised the plan in recorded remarks shown this week at the WPC Energy Congress in Riyadh, Energy Aspects reported. The consultancy said he linked it to shipping costs that are making US crude harder to sell abroad. Reuters was unable to get a copy of the recording or a transcript, so his exact wording is not known.
The Energy Department insisted that looser rules would not give Russia a new way to ship its oil or fuel. Treasury passed questions on to the Energy Department. Nothing has been decided yet.
Why shipping is so expensive
Freight has become a big slice of what refiners pay for a barrel. In its October report, the International Energy Agency said a supertanker from the Gulf to Asia cost around $36 a barrel to hire in early October. That is over five times the pre-conflict level. Shipping crude from the US Gulf Coast to China topped $37 a barrel.
Refiners are feeling it. The IEA said margins for Asian plants running medium sour crude, a type common in the Gulf, turned negative in September.
Owners have good reason to stay away. Maritime security sources counted at least 12 attacks on tankers around Hormuz between September 28 and October 5, the most in any week of the conflict so far, Reuters reported. Many cargoes now cross the strait on one tanker and are moved onto a second ship outside it, which adds cost.
Why the fix may fall short
Shipping analysts doubt the plan would add many ships. Energy Aspects said most of the sanctioned tankers have kept trading in recent months anyway, so lifting US curbs frees up little new capacity. At most, a small number could be used for shuttle runs through Hormuz.
Insurance is a bigger hurdle. Maritime sources told Reuters that marine insurers remain subject to EU and UK sanctions, which do not change just because Washington does. Insurers in the International Group of P&I Clubs cover about 90% of the world's ocean-going tonnage, and most are based in Britain and Europe. Without that cover, many charterers and terminals will not deal with a tanker.
The plan also does nothing about the danger that pushed rates up in the first place. A ship with a fresh US license still has to sail past the same attacks.
There is a policy tension, too. On October 8, Treasury blacklisted another batch of Iran-linked shadow fleet ships and said the action had knocked out most of what was left of Iran's network. A week later, the administration is weighing letting some blacklisted vessels back into lawful trade.
Pump prices and the midterms
With the November 3 midterms less than three weeks away, expensive fuel is a liability for the White House. AAA's national average for regular gasoline was $4.36 a gallon on October 8, a record for the season and about $1.25 above a year earlier.
The idea also follows Trump's Russian diesel deal, which lets Russian diesel be sold and shipped through April 7, 2027. That waiver drew fire from Kyiv, European leaders and some Republican senators. Italian Prime Minister Giorgia Meloni called it a "very risky choice." On Wednesday, Kirill Dmitriev, the Kremlin's envoy, said the diesel deal could open the door to wider business ties. Any step that looks like a break for Russia-linked shipping is likely to face the same pushback.
What to watch
- Whether Treasury publishes licensing rules, and which ships qualify
- Gulf-to-Asia supertanker rates over the next few weeks
- How EU and UK insurers and regulators respond
- Attacks on shipping near Hormuz, still the main driver of freight costs