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White Paper | In Focus: Sanctions Risks Within the Tanker Sector


Crude oil tanker trade is one of the cornerstones of the global shipping industry. While oil is currently crucial in powering the modern world, the tanker sector has particular characteristics that make it vulnerable to sanctions and illicit activities.

With a global fleet of nearly 8,000 vessels, including some of the largest ships ever built, the primary use for these tankers is to move crude oil across the globe. Tankers like this do not follow fixed routes or schedules, and many shipments are done on a one-off basis, meaning both the movements and involved parties of crude oil tankers can be unpredictable and ultimately risky.

With the heightened risks in the tanker sector coming to the forefront of regulatory focus in the past year, specific advisories and tighter sanctions have been put in place.

Compounding this are the high levels of sanctions risk associated with many of the major sources of oil. The Persian Gulf is the world’s biggest source of oil and the epicentre of the tanker trade, however, Iranian oil has a long history of sanctions. In 2011, US sanctions targeted the Iranian oil industry, followed by the EU banning imports of Iranian oil in 2012. Following a deal in 2016, sanctions were lifted, however this only lasted until 2018, when sanctions were re-imposed on Iran and by default, Iranian crude.

Due to this, Iranian oil poses a significant compliance risk. There is a high potential for vessels in and around the Persian Gulf to receive sanctioned cargo, either knowingly or not, or for vessels to deceptively call Iranian ports, or perform illegal ship-to-ship transfers. US sanctions on Venezuela have created a similar risk due to the country’s massive petroleum sector.

These heightened risks in the tanker sector have led to regulators increasingly focusing on it, which has significantly impacted the industry. The U.S. State Department, U.S. Treasury Department and its Office of Foreign Asset Control (OFAC), as well as the U.S. Coast Guard have taken action against many of the entities involved in the tanker trade. OFAC has specifically put out advisories since the beginning of 2018 regarding illicit maritime activities regarding sanctions on Iran, North Korea, Venezuela, and Syria. These advisories outline deceptive shipping practices, which include physically altering a vessel’s identification, falsifying documentation, turning off or manipulating AIS-tracking systems, and conducting ship to ship transfers with sanctioned vessels and cargo. They also include lists of suspicious vessels, and while most may not be designated, they are nonetheless believed to have carried out sanctioned activities and are being closely monitored by U.S. authorities.

In the following paper we explore the current landscape of the tanker market and how it came to be so volatile, alongside recent examples of bad practice. We will also discuss the ongoing efforts of regulators and how businesses within the tanker sector must look to mitigate their regulatory exposures. It is key to understand that the cost of non-compliance with penalties and negative impact on the corporate reputation and shareholder value will outweigh the cost of compliance overall.

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