US Energy Secretary Chris Wright has stated that the Trump administration is authorizing the sale of certain sanctioned tankers, with plans to convert these vessels into legitimate operators through refurbishment and approval procedures, tasked with transporting non-sanctioned crude oil.
Washington hopes to expand the pool of available tankers through this measure, easing shipping disruptions caused by the Iran conflict and obstructions in the Strait of Hormuz.
Wright stated that this is not a simple lifting of sanctions, but rather an effort to convert a portion of long-idle sanctioned vessels into legitimate capacity capable of carrying non-sanctioned crude.
Speaking at a Citadel Securities event in New York on Monday, Wright said investors have already proposed acquiring idle sanctioned tankers, refurbishing them, and deploying them for normal international crude oil trade.
"We want to move some ships from what I call the 'bad guy fleet' to the 'good guy fleet,'" Wright said, adding that these vessels will "no longer carry sanctioned oil" in the future.
His latest remarks confirm a plan previously under discussion by the US government. The Department of Energy said last week that the government is considering handling sanctions on certain "shadow fleet" tankers on a vessel-by-vessel basis, enabling their sale to legitimate operators to increase capacity in the formal market and thereby ease elevated tanker freight rates.
Not a blanket lifting of sanctions, but vessel-by-vessel "laundering" into compliance
Wright specifically denied that the US is unconditionally removing sanctions on vessels previously involved in Russian or Iranian crude oil trade. "We are converting shadow tankers into legitimate tankers," he said. "This is not lifting sanctions."
In practice, a tanker placed on the US sanctions list would need government approval, transfer to a qualified owner, and resolution of classification certification, insurance, repairs, crewing, and management issues before it could potentially re-enter non-sanctioned oil transport.
Wright estimates that approximately 1,600 vessels globally fall under the broad category of the sanctioned "shadow fleet." If the US conversion process can be scaled up, "dozens or even hundreds" of tankers could eventually re-enter the legitimate market.
One goal of this policy is to increase effective global tanker capacity. This year's Middle East conflict and attacks on commercial vessels in the Strait of Hormuz have significantly raised shipping risks, with war insurance premiums and vessel scheduling costs surging, while a large amount of normal capacity has been absorbed by longer voyages and complex routing arrangements.
Over the past week, the UK Maritime Trade Operations (UKMTO) recorded 12 attacks on vessels in Iran-related waters; oil exports through the Strait of Hormuz have also fallen from approximately 17 million barrels per day in early October to around 11 million barrels per day recently. The high-risk environment is further transmitting shipping costs to refineries and refined product markets.
Far fewer ships may actually return to operation than 1,600
Industry institutions are cautious about how much actual capacity this policy can add. Ship tracking agency Kpler previously estimated that approximately 160 very large crude carriers (VLCCs) are on the US sanctions list, equivalent to about 22% of the global commercial VLCC fleet. Of these, 46 vessels are already over 20 years old.
After excluding aged vessels and ships owned by the National Iranian Tanker Company, Kpler estimates that only about 24 tankers truly have the potential to rejoin global legitimate trade.
The problem is that the "shadow fleet" has long operated outside the normal shipping system. Many vessels lack valid classification certificates from major international classification societies, have no coverage from large insurers, and face uncertainty regarding maintenance and technical condition. Even if the US lifts restrictions on a particular vessel, sanctions from other jurisdictions may continue to apply. For example, some vessels involved in Russian oil transport remain under EU sanctions, while ships that participated in Iranian oil trade may face more complex legal and compliance risks.
David Tannenbaum, a former US Treasury sanctions official and head of Blackstone Compliance Services, said that major legitimate charterers typically will not quickly use tankers just removed from sanctions lists, and obtaining the licenses needed to dispose of, sell, or re-register vessels can itself take months or even years.
The core issue the US hopes to ease is tanker freight rates
The Trump administration has been actively seeking ways to reduce energy and living costs, and releasing some capacity from the "shadow fleet" is one such measure. After risks in the Strait of Hormuz escalated, tanker freight rates became a new cost source beyond crude oil prices. Fewer vessels, rising war risk premiums, and rerouting have undermined the competitiveness of US crude oil exports.
After the US government first floated the idea of easing certain tanker restrictions last week, the forward freight market reacted quickly. However, Wright's latest remarks indicate that the US is not choosing to let these tankers continue carrying Russian or Iranian sanctioned crude, but rather attempting to sever the vessels themselves from their former sanctioned trade: changing to legitimate owners, completing repairs and certification, and then exclusively transporting non-sanctioned oil.
This makes the policy's direct objective closer to increasing the global supply of compliant tankers and reducing transport costs, rather than expanding sanctioned countries' oil exports. The final number of vessels that can re-enter mainstream markets will depend on the speed of US approvals and whether these aging ships can once again meet international shipping insurance, safety, and compliance requirements.
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