The proposal to reduce sanctions on shadow tankers from Washington has led to a severe drop in the stocks of shipping companies in Asia. On Thursday, shares of COSCO Shipping Energy in Hong Kong fell by more than 13 percent, and shares of China Merchants Energy Shipping and China Merchants Nanjing Tanker also hit their daily lows due to a 10 percent decrease in the Chinese market.
Impact on the Maritime Transport Market
This sharp decline follows reports that the Trump administration is considering exemptions for blacklisted tankers associated with Russia, Iran, and Venezuela to transport oil and petrochemical products not subject to U.S. sanctions. An American official stated that companies will need approval from the Treasury Department to use these tankers, and this action is designed to increase tanker capacity and reduce record-breaking shipping rates.
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Challenges and Doubts
In practice, it seems that this proposal will have little impact on the available capacity of the tanker fleet. Chris Wright, the U.S. Secretary of Energy, raised this issue in his speech at the World Petroleum Congress in Riyadh. According to estimates from Clarksons Research, 1,010 tankers with a capacity of 121 million DWT have been individually sanctioned, which accounts for 17 percent of global capacity.
Analysts are skeptical that reducing sanctions can significantly change the supply of tankers. The SEB bank stated in a note to its clients that any additional capacity will be limited, and most of the sanctioned tankers are old and currently in trade.
Becky Smart, an analyst at Sentosa Shipbrokers in Singapore, noted that tankers associated with Russia seem to be more likely candidates for sanction reductions than those controlled by Iran. She also pointed to practical issues in re-employing old tankers and emphasized that major oil companies and entities related to the EU and the UK are unlikely to turn to newly sanctioned tankers.
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