2025.02.07

US Sanctions Iran’s ‘Shadow Fleet’ Tankers, Companies, and Captain

The Trump Administration has sanctioned shipowners, managers, and a VLCC captain for aiding Iran’s “shadow fleet” oil shipments, adding three tankers to the blacklist. The US Treasury’s OFAC stated the sanctions target a network facilitating Iranian crude exports to China, allegedly funding Iran’s nuclear program and military activities. Among those blacklisted are VLCC Siri captain Arash Lavian, India’s Marshal Ship Management, Seychelles-based Miletus Line, and Hong Kong firms linked to Gioiosa, CH Billion, and Star Forest tankers. Iranian brigadier general Jamshid Eshaghi and Sepehr Energy executives were also added, reinforcing US efforts to curb Iran’s oil trade.

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China to Resell US Oil Cargoes and Seek Alternatives After Tariffs Impact Trade

In response to Beijing's 10% tariffs on US crude, China's state-run refiners are expected to resell purchased US oil cargoes and seek alternative sources from Africa, the Middle East, and other regions. US imports, which dropped significantly since 2020, will be replaced by regional light crudes like Murban and Libyan, and possibly North Sea grades. The move follows heightened tensions between the US and China, with China’s private refining sector also facing supply pressures due to sanctions on Russian and Iranian oil. As a result, regional crude prices are seeing upward pressure, particularly for medium and light grades. The situation has also led to a scramble for replacement supplies, with a notable premium on some non-US oil cargoes.

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Freight Rates for ESPO Blend Oil Drop as Tanker Availability Improves

Freight rates for ESPO Blend crude oil shipped from Russia's Kozmino port to China have fallen by 50% in early February compared to mid-January, as tanker availability improved following U.S. sanctions. Freight costs had soared to $6-$7.5 million per shipment after sanctions on January 10, but have since eased to around $4-$5 million as more non-sanctioned vessels entered the market. While the supply chain disruption has softened, it hasn't fully resolved, and traders anticipate that rates could continue to decline, especially with new vessels expected by the end of February. In January, shipments of ESPO Blend from Kozmino totaled 3.5 million metric tons, slightly lower than the monthly average in 2024.

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Kazakh Oil Shift to Turkey Set to Boost Aframax and Suezmax Demand

Kazakhstan is redirecting crude exports from Russia to Turkey, increasing aframax and suezmax demand in Ceyhan. BRS Group reports that Kashagan field barrels are now flowing through the Baku-Tbilisi-Ceyhan (BTC) pipeline, alongside Tengiz field crude. Kazakhstan aims to reduce reliance on Russia, as over 80% of its exports previously moved via the CPC pipeline to Novorossiysk. This shift favors tanker loadings from Turkey over Russia. Additionally, Chevron’s Tengiz expansion could add 260,000 barrels per day, equating to 158 aframax or 105 suezmax loadings annually, further reinforcing the trend.

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Trans Mountain Explores Pipeline Expansions to Increase Capacity by 300,000 bpd

Trans Mountain, the Canadian pipeline operator, is exploring both short and long-term expansion projects that could add between 200,000 and 300,000 barrels per day (bpd) to its current capacity of 890,000 bpd. The expansion comes in response to growing demand, especially after U.S. tariff threats on Canadian oil, which were temporarily paused by President Trump. Short-term solutions include using a drag-reducing agent to enhance flow, while longer-term plans focus on adding pumps. The company also anticipates easing port restrictions in Vancouver to allow for increased tanker loadings, with potential to load up to 30 tankers per month once nighttime transit is allowed. Trans Mountain has been receiving more inquiries from potential shippers, and the Canadian government has been supportive of the expansion efforts.

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DHT Weighs Fleet Sales and Time Charters Amid Strong VLCC Market

DHT Holdings is considering selling its oldest VLCCs while evaluating time charter offers for its four newbuildings set for 2026 delivery. CEO Svein Moxnes Harfjeld acknowledged potential challenges in selling older vessels due to growing demand from the dark fleet. Meanwhile, two unnamed charterers have expressed interest in long-term deals for the newbuilds, though no agreements have been reached. The company recently sold DHT Scandinavia for $43.4M and secured a $40,000 per day charter for DHT China. With VLCC time charter rates rising, oil traders and companies are eager to secure tonnage. DHT posted a $26.8M profit in Q4, with 81% of Q1 days already booked at an average of $38,300 per day.

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Hengli Heavy Industries in Talks with Major Shipowners for VLCC Newbuildings

Hengli Heavy Industries is in talks with major shipowners about its VLCC newbuildings, following a pre-Chinese New Year tour by vice president Chen Hanlun. Rumors swirled that John Fredriksen secured six open VLCC slots at $118M each, but sources dispute any confirmed deal. VLCC newbuilding prices are closer to $120M-$123M, creating a potential price gap. Hengli, which entered the VLCC sector in 2023, has previously sold two units to Dynacom Tankers for $122M each. With increasing owner interest in tankers and Hengli’s ambitions to expand into LNG carrier construction, market activity is heating up.