Freight rates have remained counter-seasonally low.

Normally, we would expect crude tanker rates to rise during this period as refiners stock up on crude to boost their heating oil supply for the Northern Hemisphere winter. That hasn’t happened this year. Additionally, concerns about frontloading oil to offset potential tariffs have not materialized. Instead, we’re seeing up-and-down volatility, with freight rates highly sensitive to news-driven spikes. However, when you assess the overall picture, freight rates remain rangebound.

Could we see a new Trump administration curb Iranian exports as they did five years ago?

We’re currently looking at about 1.6 million b/d of Iranian exports, supported by roughly 200 tankers. About a third of these tankers are sanctioned, yet they’re still delivering crude to China, effectively operating outside the bounds of Western regulations. If a Trump administration wanted to crack down, the big question is how effective sanctions would be under the current circumstances. The deeply discounted crude remains attractive, and China is also importing Russian oil on sanctioned vessels flagged by the US, many of which are heading to the teapot refining region in China.

Would any intervention need to be very robust given how embedded this process is now?

Under maritime conventions, all ships have the right of innocent passage, so stopping vessels without cause, unless they are falsely flagged, is not an option. The most robust response currently available is to designate these vessels for sanctions, but this approach hasn’t proven effective. Cracking down on Western maritime service providers hasn’t yielded much either, as many are no longer involved in supporting these vessels. These tankers are often insured under unknown or non-Western entities and flagged by countries that are less regulated. For example, Panama, the world’s largest flag state by shipping numbers, is making efforts to crack down on ships flagged under its registry that are carrying Iranian oil. However, when faced with such scrutiny, these vessels simply reflag to even less regulated jurisdictions. For US sanctions to stop the flow of Iranian oil, that would require the cooperation of China, which is unlikely to be part of any crackdown strategy.