What a deal with Iran would mean for the tanker trades

The prospect of the United States lifting sanctions on Iran has dominated tanker trade headline all month. Recent developments, including US president Donald Trump’s comments suggesting a potential breakthrough in US-Iran nuclear negotiations, have raised expectations of increased Iranian crude exports.

Kpler analysts project that a finalised deal could stabilise Iranian crude exports at approximately 1.65m barrels per day, with a potential upside of 100,000 barrels per day. In contrast, a no deal scenario may lead to a 500,000 barrels per day decline in exports by year-end. Currently, Iranian exports average 1.60m barrels per day, slightly lower than the second half of 2024 but still resilient. However, declining Chinese imports and increasing floating storage suggest market challenges.

The lifting of sanctions would likely lead to increased Iranian crude exports, necessitating additional tanker capacity.

Analysts at SEB, a Swedish bank, note that the return of Iranian crude to compliant markets could benefit the tanker sector, particularly crude tankers. However, the potential reopening of the Red Sea route may introduce new dynamics, potentially impacting tanker demand.

Poten highlighted the significance of the Iranian-controlled tanker fleet and the broader dark fleet that has supported sanctioned trades over the past seven years. The return of National Iranian Tanker Company (NITC) vessels to the international market could displace older, less efficient vessels, positively affecting tanker demand. However, NITC fleet’s aging vessels may require maintenance and vetting before re-entering the market.

Broker Braemar suggested that a US-Iran nuclear deal could be bullish for VLCCs. The reactivation of floating storage and the cessation of ship-to-ship (STS) transfers for Iranian exports would likely increase demand for compliant tankers. Additionally, the potential for increased Iranian oil exports could put downward pressure on oil prices, influencing freight rates.

Recent research from Gibson discussed the broader market impact, noting that increased Iranian oil on the water could pressure oil prices and affect shale producers in the US. This dynamic could complicate OPEC+ production policies and influence tanker demand patterns.

Xclusiv Shipbrokers observed that a successful deal may accelerate the scrapping of older dark fleet vessels, leading to a reduction in the active tanker fleet. This reduction could improve overall market conditions by decreasing excess supply and enhancing fleet quality. The average age of vessels in the NITC fleet is 17 years, and the Islamic Republic of Iran Shipping Lines operates ships averaging around 18 years old. Modernising Iran’s maritime fleet would require significant investment and time.

The potential lifting of US sanctions on Iran presents both opportunities and challenges for the global tanker trade. While increased Iranian crude exports could boost tanker demand, the return of Iranian-controlled vessels and the broader dark fleet may introduce complexities. The tanker sector’s response will depend on factors such as fleet modernisation, maintenance requirements, and broader market dynamics.