The Daily View: Sanctions policy meets the shadow fleet’s shape‑shifting reality

US TREASURY Secretary Scott Bessent insists sanctions are “instruments of peace”, not aggression — a lofty claim for a tool that has reshaped global oil flows and spawned an entire parallel shipping ecosystem.

In a speech on Tuesday, Bessent promised a modernised sanctions architecture, one that is clearer, more targeted and more responsive to fast‑moving geopolitical realities.

For an industry long frustrated by the unpredictability of US designations, the pledge of consistency will sound like overdue relief.

Bessent is right on one point: sanctions work best when they are sharp, time‑bound and designed to produce specific outcomes.

Instead, many have lingered for years, calcifying into a system that has created as many distortions as deterrents.

Chief among them is the rise of the so‑called shadow fleet — hundreds of ageing tankers operating under fake flags, sham insurers and opaque ownership structures, moving sanctioned oil with near‑total impunity.

The US Treasury says it is adapting. So are the people it is trying to stop.

The latest evolution is striking. Fraudulent, high‑risk operators are gravitating towards the Middle East, and one in six of the trickle of transits daring to cross the Strait of Hormuz have no legitimate flag.

But the shadow fleet is not merely expanding — parts of it are quietly reintegrating into mainstream trades.

Several vessels with long histories of AIS manipulation and dark port calls have recently re‑entered legitimate markets, taking on compliant cargoes in Venezuela and the Middle East Gulf with their transponders switched on. Some have even been chartered to load in Iraq, despite being 25‑plus‑year‑old tankers flying flags of convenience such as Guinea‑Bissau.

This is not a mass rehabilitation. These ships still exhibit classic shadow fleet traits: spoofing, opaque ownership, and trade patterns that zigzag between sanctioned and non‑sanctioned routes. But their reappearance in legitimate supply chains exposes a growing grey zone — one where vessels can toggle between illicit and compliant behaviour just enough to evade scrutiny.

That ambiguity is dangerous. For years, compliance teams could identify shadow fleet vessels by their predictable loops — Russia to China, Iran to Malaysia and back again. Now, a ship may run sanctioned barrels one month and lift a clean Iraqi cargo the next. Ten such cases have emerged in recent weeks alone, and the true number is almost certainly higher.

Bessent’s modernised sanctions regime aims to bring clarity. But unless enforcement keeps pace with the shadow fleet’s ingenuity, Washington may find itself playing catch‑up with an industry that has learned to survive — and increasingly, to blend in.

Richard Meade
Editor-in-chief, Lloyd’s List

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