US May Ease Sanctions on Russia, Iran Tankers
The Trump administration is exploring ways to relax sanctions on oil tankers connected to Russia and Iran, aiming to tackle surging diesel costs before the November midterms. Under discussion are measures to permit previously blacklisted ships to be acquired by compliant operators while easing restrictions to enable their participation in international trade, sources close to the situation told the Financial Times. A U.S. Treasury official confirmed the Office of Foreign Assets Control (OFAC) might permit such deals “on a case-by-case basis,” so long as approved purchasers acquire the vessels and refurbish them for legal commercial operations.
Why Now: Rising Fuel Costs and Inflation
The move comes amid data showing U.S. consumer inflation rose to 3.7% in September, with diesel prices rebounded and impacting the broader economy. These prices averaged $6.31 a gallon in recent days, just below a record high of $6.53. The White House has responded by urging allies to release more of it and threatening an export ban. Trump signed an executive order permitting tax-free red diesel for public road use, but prices remain high. The International Energy Agency has warned of a global diesel shortage lasting until mid-2027.
Analysts Question Effectiveness
Energy Secretary Chris Wright argued at the World Petroleum Conference in Riyadh that a shortage of vessels is a key bottleneck driving up global freight rates and fuel costs. However, analysts doubt easing sanctions would significantly reduce prices. Between 13% and 19% of the global tanker fleet is under U.S. sanctions, according to Energy Aspects, but the age and poor condition of these vessels could limit their contribution to commercial shipping capacity. Research group Kpler expects the measure to have virtually no impact on the current tanker crisis, attributing high fuel prices primarily to heightened war risks in the Middle East rather than vessel shortages alone.
Potential Impact on Russia and Iran Conflicts
For Russia, easing restrictions could open new avenues for oil trade and weaken economic pressure intended to constrain Moscow’s war effort in Ukraine. Italy’s Prime Minister Giorgia Meloni criticized Trump’s plan to buy diesel from Russia as a “very risky choice” that undermines international pressure on Vladimir Putin. For Iran, the proposal reflects Washington’s effort to contain fuel costs amid conflict-related disruption in the Middle East. Yet if tanker restrictions are relaxed without materially improving supplies, the administration could face criticism for weakening sanctions without delivering meaningful relief at the pump.
