Sanctioned Oil Tankers May Get a U.S. Reprieve from Trump. But Freight Costs Might Not Feel a Difference.

The Trump administration is considering removing sanctions from some oil tankers linked to Russia, Iran and Venezuela to reduce shipping costs that have made American crude increasingly expensive for overseas buyers.

A U.S. official told Reuters that the proposal would let approved buyers acquire previously sanctioned vessels and return them to commercial service carrying oil and petroleum products permitted under U.S. rules. The official described the intended cargo as “legal oil,” with the goal of moving more crude and refined products out of the Gulf.

The discussions follow President Donald Trump’s temporary suspension of sanctions on Russian diesel as prices continue to rise. That decision drew criticism from Ukraine, European countries and Republican senators who said it would give Moscow additional revenue to finance its war. The vessel proposal remains under consideration.

Companies interested in purchasing sanctioned ships would have to seek Treasury Department approval.

Trump is also seeking to get Russian diesel onto international markets quickly. His diesel sanctions suspension runs through April 7, raising questions about which ships would carry those supplies and how Washington would enforce the boundaries of any vessel relief.

Energy Secretary Chris Wright discussed the possibility in a video address to the World Petroleum Congress in Riyadh, according to research firm Energy Aspects. He linked the proposal to exceptionally high freight rates that have weakened demand for American crude.

Shipping costs have become a competitive disadvantage for U.S. producers. Wars in Iran and Ukraine have driven tanker rates sharply higher, making long voyages to Asia more expensive and encouraging refiners there to consider supplies from the Middle East and Latin America.

However, removing U.S. sanctions would not automatically produce a large pool of additional tankers. Energy Aspects said many vessels targeted over Russian or Venezuelan connections had continued trading during the previous three months. Their removal from sanctions lists would therefore not necessarily represent new shipping capacity.

The research firm also pointed to the ships’ condition. Many shadow fleet tankers are old and poorly maintained, limiting how quickly they could enter mainstream commercial service. It said relief might make a small number available for shuttle trips through the Strait of Hormuz, without substantially lowering freight rates worldwide.

Insurance presents another obstacle as maritime industry sources told Reuters that insurers would remain subject to European Union and British restrictions, potentially limiting the benefits of a U.S. policy change.

Those constraints leave the administration facing uncertainty over how much relief the proposal could deliver before the November 3 midterm elections. High oil and fuel prices pose a political risk for Trump as Republicans seek to retain both chambers of Congress.

By Friday, supertanker rates had retreated from their records. Reuters reported that weaker demand following attacks on Middle Eastern shipping and expectations of possible sanctions relief contributed to the decline. Rates nevertheless remained elevated as insecurity continued to disrupt regional oil transport.