Nearly 10% of global tanker fleet blacklisted – remaining market set to benefit

The Office of Foreign Assets Control (OFAC) has added further vessels transporting Iranian and Russian oil above the price cap to its sanctions list, raising the total to 400 — nearly 10% of the global tanker fleet. With some Indian and Chinese ports refusing these ships, a substantial share of capacity has disappeared, causing rates to spike sharply.

“Tanker rates have lifted across most segments, spurred by positive sentiment following the recent US sanction actions”, Jefferies writes in a note.

The new US sanctions will hit Russia’s energy sector, including more than 180 ships and dozens of oil traders and oil field service providers. The sanctions are also an attempt to limit the Kremlin’s revenues, which fund the Russian war machine in Ukraine.

According to Fearnleys, China’s port ban alone could create demand for the equivalent of 40 VLCCs — an indication of the scale of this change. With very few new crude tankers set to join the fleet in 2025, the supply-demand gap is expected to widen further, raising freight rates even more. As cargoes shift to compliant ships and any additional cuts in Russian or Iranian exports boost the need for larger vessels, the tanker market stands to benefit.

According to DNB Markets, there is room for western governments to continue increasing the number of sanctioned vessels on their lists, which will boost the tanker market further. Read more about the situation here at https://shippingwatch.com/carriers/Tanker/article17811407.ece

Source: Fearnleys, Clarksons Research and Shippingwatch.