COULD THE DAYS OF THE DARK FLEET BE NUMBERED?
Amid growing concerns about the size and the operation of the ‘dark fleet’, rapid geopolitical developments resulting from policies adopted by the new US Administration policies could change the backdrop.
In its most recent Tanker Opinion, New York broker Poten & Partners points out that Russia, Iran and Venezuela are all sanctioned by the US and other western countries and therefore use the dark fleet to ship their crude oil and products to markets around the world. All three countries rely on energy exports as key components in their economies.
While there are no formal signs that sanctions will be lifted by the new US administration, its term has proven unpredictable so far, and sanctions relief would be a valuable bargaining in negotiations with Russia to end the Ukraine war.
Although there is no formal definition of the dark or shadow fleet, tankers operating in this sector are invariably old, poorly maintained, fly poor quality flags, have inadequate insurance arrangements, and are manned by poorly trained and managed seafarers. Their owners are hard to trace, the tankers’ names are frequently changed, and flags are often swapped to preserve anonymity.
The size of the shadow fleet is not known for sure. According to Poten, some analysts believe there are around 600 tankers trading in this way; others put the number as high as 1,100. Vessels formally sanctioned by the governments of the US, the UK and/or the European Union are a subset of the dark fleet.
Although this sanctioned group is smaller in number, 476 tankers have been identified by energy analyst Vortexa, including 94 VLCCs, 68 Suezmaxes/LR3s, 179 Aframaxes/LR2S, 25 Panamaxes/LR1s, 78 MRs, and 32 smaller vessels. Owners of these tankers face significantly greater challenges in trading them, because the receivers of cargo do not want themselves to be sanctioned.
Poten’s analysis reveals that most of the tankers are between 15 and 25 years old and about 60% are more than 20 years old. However, there is also about six million deadweight of tankers in the 12-14 year range.
Most of the tankers, notably Suezmax and Aframax units, are shipping Russian oil while the number carrying Iranian cargoes is smaller, but still substantial, according to Poten’s analysis. Venezuelan exports are modest and the number of tankers engaged in exports there is limited.
If sanctions were to be lifted over the next 12-18 months, Poten believes that a significant number of tankers in the 20+ year category will be recycled, although this in itself throws up a challenge in terms of global recycling capacity. Most of the tanker companies operating in the dark sector will disappear, Poten projects, because Sovcomflot and the National Iranian Tanker Company will carry national cargoes once again.
If sanctions were to end, the broker believes that the impact on the tanker market will generally be positive, particularly if many older vessels are quickly sold for recycling. If trade flows do not immediately revert to pre-war levels, tonne-mile demand is likely to remain elevated and tonnage supply restricted.
“However, even if trade patters return to ‘normal’, the removal of a large portion of the dark fleet will boost the market,” the broker declares.
