The US imposed sanctions yesterday on 35 entities and vessels accused of transporting illicit Iranian petroleum to foreign markets in a curtain raiser to potentially a far stricter attitude towards Iran come next month.
One ship in particular singled out by the US has made headlines – the Ceres 1, a VLCC with a history of hauling Iranian crude, which was involved in a fiery collision (pictured) with a Hafnia product tanker off Malaysia this July. At the time of the collision, the Ceres 1’s vessel tracking signals were inconsistent with its position, which inhibited communication with the other vessel. The Ceres 1, one of 10 VLCCs sanctioned yesterday, returned to China after the accident where it underwent significant repairs and has since resumed trading, currently moored at a port in Vietnam.
“Iran continues to funnel revenues from its petroleum trade toward the development of its nuclear program, proliferation of its ballistic missile and unmanned aerial vehicle technology, and sponsorship of its regional terrorist proxies, risking further destabilising the region,” said acting under secretary for terrorism and financial intelligence Bradley Smith. “The United States remains committed to disrupting the shadow fleet of vessels and operators that facilitate these illicit activities, using the full range of our tools and authorities.”
As well as a host of vessels, the US Treasury also sanctioned many shipmanagement companies yesterday.
Attention is now turning to how the return of Donald Trump to the White House next month will impact Iranian oil exports.
In his first term, Trump withdrew the US from the Iran nuclear deal and reimposed a full embargo on Iran’s crude oil exports in 2019. As a result, Iran’s crude oil shipments collapsed from 2.5m barrels per day in the first half of 2018 to 250,000 barrels per day. During the Biden administration, sanctions were not as strictly enforced and Iranian exports gradually recovered. In 2024 year-to-date, Iranian exports averaged more than 1.5m barrels per day according to data compiled by Poten & Partners.
Private Chinese refiners buy most of Iran’s sanctioned crude, but amid higher prices and preparation for the incoming Trump administration, Iranian flows have dropped. Recently, teapot refiners in China, principally in Shandong province, have sourced supplies from West Africa and the Middle East. November crude imports from Iran were 10% lower than in October, according to MB Shipbroking.
“If the US could dramatically reduce Iranian exports, this would give a boost to the tanker market, in particular VLCCs,” Poten noted in a recent report. “A large proportion of the VLCCs in the dark fleet are used to transport Iranian crude. Venezuela’s exports are small and Russia mostly utilises aframaxes and suezmaxes. Iranian barrels would need to be replaced by non-sanction oil from other producers, which would create additional employment opportunities for the mainstream tanker fleet.”
Howard Lutnick, who owns Poten & Partners, has been nominated to be Trump’s commerce secretary come next month’s inauguration.
Braemar, another broker, has also been studying what Trump’s attitude to Iran might pertain to the tanker trades, noting in a recent report that five years ago, his previous administration sanctioned Chinese state-run carrier COSCO’s subsidiaries for their participation in Iran oil trade, causing freight rates to spike to $200,000 a day.
“Sanctions could hit Chinese owned/built ships again, as well as buyers and facilitators of Iranian crude flows. This may include independent refiners in China and firms in Malaysia and Singapore, hubs for the transhipment of Iranian oil,” Braemar suggested, adding: “This could cut Iranian crude oil exports back to 2020, around 1m barrels per day lower than this year’s levels. Lost Iranian barrels can be easily covered by Saudi Arabia and the UAE, benefitting tankers, particularly VLCCs, in the mainstream fleet.”
Tanker stocks jumped yesterday on the sanctions news, and the potential for further action against Iran.
The US has sanctioned 35 VLCCs in total, with another 85 on a watchlist something analysts at Jefferies described as a “potential win-win… increasingly on the horizon for VLCCs and the tanker market overall”.
If the US does go after the other 85 VLCCs on its watchlist, Jefferies analysis suggests this would shift crude tanker capacity utilisation significantly from 85% to 95%.
In related tanker sanctions news, Bloomberg is reporting on how Russian tankers are having to take longer, evasive routes to get their cargoes to market as sanctions rain in around Europe.
Following the UK’s recent decision to crack down on Russian shadow ships transiting the English Channel, the sanctioned aframax tanker Attica has been tracked passing by Scotland’s Shetland Islands — rather than through the English Channel — as it likely heads to India via the Suez Canal. Bloomberg calculations suggest this rerouting adds two days to the ship’s voyage.
