US weighs lifting sanctions on Iran's 'shadow fleet' to address surging costs

What Happened

US Energy Secretary Chris Wright said in a video address to an energy forum in Riyadh that the Trump administration is discussing easing sanctions on 'shadow fleet' tankers tied to Russia and Iran to address record freight rates that have raised the cost of shipping American energy abroad, according to Energy Aspects. The Financial Times reported on Thursday that the US could allow the sale of blacklisted vessels to non-sanctioned operators and lift sanctions, while Reuters reported the US could allow 'legal oil' to flow on previously sanctioned vessels. Energy Aspects estimates around 15 percent of the world's tanker fleet is under US sanctions; diesel prices in the US are up almost 16 percent in the last month. Gibson Shipbrokers said earlier this month that sending a Very Large Crude Carrier from the US Gulf coast to the Far East costs $80m, more than launching a SpaceX Falcon 9 rocket at $74m. The move comes amid tanker rates that have soared as a result of the US-Israeli war on Iran, according to the article. Gulf states are shipping more oil and refined products out than when the war started, but rely on shuttle services from the Strait of Hormuz to other ships to avoid Iranian strikes, and tankers take longer routes around the Cape of Good Hope to avoid Houthi attacks in the Red Sea. Washington has simultaneously increased sanctions on Iran: this week it rolled out economic penalties on 16 individuals and 10 entities in Iran; last week it lifted sanctions on Russian diesel fuel, sparking a diplomatic crisis with Ukraine.

Key Actors

Why It Matters

US sanctions on Iran's shadow fleet have been a core tool of maximum pressure against Iranian oil exports. Any partial lifting, even for non-Iranian oil or vessel sales, could weaken enforcement against Iranian crude that funds the IRGC and its regional networks. But the immediate driver is soaring domestic fuel costs ahead of US midterm elections, creating a tension between economic relief and military-economic pressure on Iran while fighting over the Strait of Hormuz continues. Shipping disruption around Hormuz and the Red Sea also affects global energy security.

Watch For

Monitor whether the Trump administration formally announces shadow fleet sanctions relief and the exact terms, including vessel sales to non-sanctioned operators and permitted cargo types. Track changes in US diesel prices, tanker rates, and any Iranian reaction concerning the Strait of Hormuz. Also watch for continued US sanctions designations on Iranian individuals and entities, Houthi attacks in the Red Sea, and diplomatic fallout with Ukraine after the lifting of Russian diesel sanctions.