EU opens legal recycling route for shadow fleet tankers, sanctions maze constrains impact<\/p>\n
New EU rules will provide a legal channel for recycling shadow fleet tankers, according to industry participants and analysts, even though their actual impact could be limited by the complex international sanctions network.<\/p>\n
In its 20th sanctions package against Russia, adopted April 23, Brussels announced an exemption for companies to deal with EU-sanctioned ships if they were to be sent to scrapyards.<\/p>\n
\u201cThe scrapping clause is a constructive addition,\u201d Dimitris Roumeliotis, a research analyst at Xclusiv Shipbrokers, told Platts, part of S&P Global Energy. \u201c\u0399t creates a legitimate pathway for vessels to exit the shadow fleet through recycling.\u201d<\/p>\n
In recent years, Russia, Iran and Venezuela have partnered with shadow fleet operators to acquire tens of hundreds of aged tankers to maintain their energy sales in circumvention of Western sanctions.<\/p>\n
Many shipping professionals have warned that such ships pose significant environmental risks with their lack of proper vetting, and some suggested Western governments should create legal avenues for the ships to be scrapped at the end of their trading life.<\/p>\n
In a note published in January, the Royal United Services Institute for Defence and Security Studies said sanctioned ships could need to travel to junkyards uninsured and unregulated with recycle industry participants seeking to avoid legal risks.<\/p>\n
Data from S&P Global Commodities at Sea and Maritime Intelligence Risk Suite shows that 31 of the 64 oil and chemical tankers demolished between January 2025 and April 2026 were sanctioned, indicating a large number of ships were in recycle sales outside of intentional legal regimes.<\/p>\n
\u201cThe EU policy change will definitely help, but its impact will be evaluated case by case,\u201d said Kiran Thorat, a trader at GMS, a Dubai-based company that purchases aged ships and sells them to shipbreakers.<\/p>\n
\u201cThe exemption will be enforced by member states, each of them could have different national requirements. Also, this only covers the EU\u2019s Russia program \u2026 there are also many ships sanctioned by the US and UK not being exempted currently.\u201d<\/p>\n
CAS data shows 563 oil and LPG tankers were on the EU\u2019s blacklist as of the end of March, of which only 31 were not sanctioned by the UK or the US, or both.<\/p>\n
The exemption was announced alongside Brussels\u2019 new requirement for EU-based tanker sellers to ensure their ships would not be used to transport Russian oil by the initial buyers and future buyers in resales.<\/p>\n
While the sales ban is aimed at limiting the shadow fleet\u2019s growth, the exemption for scrapping is designed to encourage recycling by sanctioned tanker operators, according to Fotios Katsoulas, tanker research director at S&P Global Energy CERA.<\/p>\n
\u201cThe goal is to force a choice: recycle the ship or face a total prohibition on maritime services,\u201d Katsoulas said.<\/p>\n
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