A “tug of war” is getting started over ships involved in illicit trades.

Barry Rogliano Salles (BRS) said in its monthly tanker market note that with Russia-connected ships facing port and insurance bans and the return of Iranian oil to above-board trading looking remote, the two countries may begin competing for tonnage.

“Owners of dirty shadow tankers who are not affiliated to Iran or Venezuela may soon have to decide whether they will continue transporting Iranian or Venezuelan oil or move to carrying Russian crude and fuel oil,” the French shipbroker said.

With Venezuelan production not expected to be significant, Russia and Iran would compete for 53 third-party VLCCs and 30 suezmaxes to bring their oil cargoes to willing buyers, BRS said.

Russia would need more capacity and new buyers if it were to keep up its exports of nearly 5m barrels per day, the broker said.

It indicated those buyers would come from Africa, Latin America and other non-China and India Asian countries.

“Russia would have to secure extra shadow tankers either by dipping into the second-hand market, or by enticing shadow tankers away from other trades by paying a premium compared with Iran or Venezuela,” BRS said.

The note suggested the so-called shadow fleet — the ageing tankers carrying mostly Iranian oil in defiance of US sanctions — could undergo other changes, as well.

BRS said it identified 268 ships of 34,000 dwt and above having carried Iranian or Venezuelan oil over the last several years.

A further 133 ships could join the shadow fleet, bringing the total to 401, if Russian tankers are counted. Those ships are not formally sanctioned the way Iranian and Venezuelan tonnage is as they simply face port bans from most developed economies and bans on insurance in the European Union and potentially the UK.

MRs in the money?

Nearly all the ships currently involved carry crude oil or fuel oil, including smaller product tankers, the broker said.

It suggested the need for Russia to export products could support asset values for MR2s as there are 477 such ships over 15 years old which could be purchased to move those cargoes.

BRS was noncommital about the impacts on other product tanker asset classes.

“We are unsure whether there will be any support for LR2 prices from Russia. This is due to the LR2 fleet
being relatively young (average age 9 years) and that the vintage LR1s should make better, and likely cheaper, candidates to carry Russian clean products over longer distances,” the broker said.