Iranian oil poised for mainstream fleet return amid US-Iran peace deal

A leaked draft of a 14-point memorandum between the US and Iran reportedly includes provisions for lifting western sanctions and issuing waivers for Iranian crude, petrochemical products, and associated services like banking, insurance, and transportation. Jerry Kalogiratos, chief executive of Capital Tankers, stated that once Iranian oil is treated like other non-sanctioned crude, there will be less incentive to use substandard ships.

Lars Barstad, chief executive of Frontline, noted that Iranian oil, if freed from sanctions, would represent a new supply for the compliant fleet. The potential increase in demand for Iranian crude on mainstream tankers could provide support for crude tanker rates, similar to the effect seen earlier this year when a general license for Venezuelan crude led to increased exports on compliant ships and supported rates from the US Gulf coast.

Stephanie Connor, former head of policy at OFAC, commented that the deal would be exceptional for Iran. Historically, China's independent refining sector was a significant importer of Iranian crude despite US sanctions. The issuance of a general license for Iranian exports could incentivize countries to resume purchasing Iranian crude, particularly those already trading with Iran despite existing US sanctions.