US weighs relief for sanctioned shadow fleet tankers, days after freeing Russian diesel
Officials say only unsanctioned oil would sail, but Reuters says Trump’s diesel push could pressure them to let Russian fuel aboard.
The Trump administration is considering adjusting sanctions on tankers that transport oil from Russia, Iran, and Venezuela, according to a US official. This development came on October 14, as reported by Reuters. An industry research group anticipates that the modification will have minimal impact on freight rates. Amid concerns about high fuel prices potentially affecting President Trump's re-election prospects before the November midterms, Washington has already eased sanctions on Russian oil and diesel this year, and is now exploring the possibility of modifying the sanctions on these tankers.
The talks are focused on enabling "legal oil" to be transported on previously sanctioned vessels, but only if the oil or fuel does not fall under US sanctions. The objective is to increase the flow of crude and refined products out of the Gulf. Companies seeking to utilize these ships would need approval from the US Treasury.
Energy Aspects, a research group, pointed out that the US Energy Secretary, Chris Wright, during a speech at the World Petroleum Congress in Riyadh, connected the easing of sanctions to record freight rates. These rates had already reached record levels following the Iran and Ukraine conflicts, which had heightened inflation and made US crude too expensive for Asian refiners, reported Reuters. The Energy Department indicated that any relief would not aid Russia in shipping its oil or refined products.
Despite this, Reuters suggested that both departments might face pressure to allow these vessels to carry Russian diesel, given Trump's efforts to expedite its export to global markets. Meanwhile, the UK is taking a different stance. UK Finance Minister John Healey urged delegates at International Monetary Fund meetings in Bangkok on October 15 to maintain stringent sanctions on Russia, particularly a more stringent ban on shipping services, which are maintaining the shadow fleet under Putin's control.
On October 9, the US Treasury granted a license permitting the trade of Russian-origin diesel until April 7, 2027. Ukrainian President Volodymyr Zelenskyy described the decision as weak and unworthy of Ukraine's allies. Democratic Senators Jeanne Shaheen, Chuck Schumer, and Elizabeth Warren criticized the move as a "total betrayal of Ukraine." Republican Senator Thom Tillis expressed concerns about potential legal violations.
In another development, Trump had urged Kyiv to spare Russian refineries and declared an "energy ceasefire" on October 11. However, neither the White House nor Russia has officially confirmed this announcement. Kremlin spokesperson Dmitry Peskov stated that negotiations regarding the ceasefire were ongoing, referring further inquiries to Trump. He claimed that the diesel deal represents a mutually beneficial collaboration between Russia, the US, and global energy markets, according to Russian newspaper Vedomosti.
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