The Trump administration is authorizing the sale of sanctioned oil tankers in an effort to allow the vessels to start legitimately shipping crude, US Energy Secretary Chris Wright said on Monday. The government is working with investors who buy idled sanctioned tankers, refurbish them and use the ships to transport non-sanctioned oil, Wright said at a Citadel Securities event in New York.
“We’re going to move some of the ships from what I call the ‘bad-guy fleet’ to the ‘good-guy fleet,’” Wright said. “They will not carry sanctioned oil anymore.” His comments are the first detailed public explanation from the administration of its turn to sanctioned tankers as it seeks to expand the number of ships available to transport crude and boost supply disrupted by the war in Iran and the effective closure of the Strait of Hormuz. Wright rejected the idea that the United States was simply removing sanctions from tankers that carried crude from countries such as Russia or Iran. “We are converting dark tankers to legitimate tankers,” he said. “There is no removing of sanctions.”
Wright estimated that there are about 1,600 vessels in the global dark fleet of sanctioned tankers, and said the conversion effort could ultimately add dozens or even hundreds of tankers to the legitimate fleet. The shipping shortage behind the move is severe: the perils of transiting Hormuz have sent fees skyrocketing, with moving oil from the Persian Gulf to East Asia now costing more than six times as much as before the conflict, and more than 40 percent of the world’s fleet of about 850 very large crude carriers either in the Persian Gulf or within a couple of days’ sailing of it, according to shipping data provider Signal Ocean.
Wright also gave the administration’s fullest account yet of the Russian diesel deal, saying part of the reason Washington agreed to work with President Vladimir Putin to release Russian diesel into global markets was to give the Kremlin an incentive to end the war in Ukraine. “If you can produce more diesel than you consume, you can export it to the world. Well, what’s their route to do that? They can end the conflict in Ukraine,” he said. The remarks come as Republicans confront voters concerned about higher fuel costs weeks before the midterm elections, with gasoline and diesel prices surging since the Middle East conflict began.