Iran forced to compete with Russia for sanctioned tankers

Iranian oil flows could be cut by increased demand for tankers that are not currently under sanctions.

Iranian oil sellers risk facing significant obstacles in transporting their cargoes out of the country, Bloomberg reported.

The reason is increased competition for “unsanctioned” tankers from Russia and Venezuela.

Iran already faces a shortage of available vessels. According to Muyu Xu, senior “oil” analyst at Kpler, “there are only a few tankers in the market that are willing to take high-risk sanctioned oil, and now Iran has to compete with Russia and Venezuela to get them.”

Although about 150 tankers were involved in the transportation of Iranian crude in 2024, more than 100 of them have been added to the sanctions list of the US Treasury Department’s Office of Foreign Assets Control.

The pool of available buyers risks shrinking further as Russia lures them with higher freight rates. Sanctions against Moscow in January have severely restricted the activities of tankers that the US has blacklisted.

According to vessel tracking data compiled by Bloomberg, two ships that OFAC sanctioned on Monday for trading oil in Iran — the Phoenix I and the Urgane I — have loaded Russian cargoes in recent days.

An additional challenge for Iran is that it still needs to transport about 25 million barrels of crude oil that were sent to China for storage in 2018-19. Iran has probably already been able to export more than half of that, but that has led to increased US sanctions on some tankers.

As nearly 80 tankers linked to Iran have been targeted by US sanctions since the fourth quarter of 2024, Iranian crude exports have been falling. Shipments have fallen to around 1.5 million barrels per day, down from 1.76 million barrels per day in November. Exports could fall by about a third from current levels by May or June.

“If the US were to lift sanctions on Russian tankers, this would be extremely good news for Iran, as it would lower freight costs for Russian oil and potentially make more tankers available to Iran,” Kpler commented.

USM previously reported that Russian oil shipments were declining due to US sanctions.