Two Regimes, One Vessel: What Sanctions Divergence Does to Your Screening

Sanctions compliance in shipping has never run on a single rulebook. The U.S., UK, and EU maintain separate designations, separate prohibitions, and separate licensing mechanisms, even when their policy objectives align. Operators have managed that by working to the strictest applicable restriction and treating the regimes as broadly convergent.

October has made the differences commercially sharp, and it has produced numbers that measure them.

On 19 October, U.S. Energy Secretary Chris Wright set out a plan to move sanctioned tankers into legitimate trade. On 8 October, Britain added 26 designations and 12 ship specifications under its Russia regime, taking its total of specified shadow fleet tankers past 600.

Within a day, analysts had begun quantifying what the divergence costs. Of the global dark fleet, Oil Brokerage estimates that 294 sanctioned tankers are free from EU or UK penalties, and that only around 75 of all sizes may be commercially available.

The two governments are not merely disagreeing. One has become a binding constraint on the other, and the arithmetic of that is now in public.

What Washington Is Actually Doing

The mechanism matters, and the detail is not yet public.

Reuters reported on 14 October that the administration was considering allowing previously sanctioned vessels to carry legal oil under Treasury authorization. Wright’s 19 October account shifts the emphasis. The U.S. government is working with investors who buy idled sanctioned tankers, refurbish them, and use the ships to transport non-sanctioned oil.

“We’re going to move some of the ships from what I call the bad-guy fleet to the good-guy fleet,” Wright said. “They will not carry sanctioned oil anymore.”

He was explicit that this is not delisting. “We are converting dark tankers to legitimate tankers. There is no removing of sanctions.” The administration is running an approval process to grant ships legitimate status.

What has not been explained is the legal instrument. Wright did not detail the sale process, the potential investors, or the OFAC authorizations that would implement it. That gap matters, because authorization to sell a vessel, authorization to employ it, and removal from a sanctions list are three different things and the reporting does not establish which combination is intended. A sale of blocked property would itself ordinarily require a specific license.

Wright put the global dark fleet at around 1,600 vessels and suggested the effort could add dozens or even hundreds of tankers to the legitimate fleet.

The context is freight and politics. Moving oil from the Persian Gulf to East Asia now costs more than six times what it did before the conflict. More than 40 percent of the world’s roughly 850 very large crude carriers are in the Persian Gulf or within a couple of days’ sailing of it, according to Signal Ocean. Gasoline and diesel prices have surged, and the midterms are on 3 November.

Why It May Not Work

Three constraints have been identified, and one of them is the subject of this article.

The incentives point the wrong way. A supertanker shuttling through the Strait of Hormuz can command as much as $40 million per trip in freight, against an early October price of around $190 million for a ten-year-old vessel on Clarkson's data. Resale values have climbed, but owners earning at those freight levels have strong reasons to keep trading rather than sell.

The eligible fleet is small and old. Oil Brokerage estimates that 294 sanctioned tankers are not subject to EU or UK penalties. Around 70 percent of those are more than 20 years old and unattractive to mainstream charterers. Taking commercial eligibility into account, Oil Brokerage puts the number actually available for mainstream employment at roughly 75 vessels of all sizes, including 50 supertankers.

“Sanctions relief does not equal immediately usable mainstream tanker capacity,” said Rahul Kapoor of S&P Global Energy, adding that the number of vessels that could realistically migrate back into mainstream trading would be materially smaller than the overall sanctioned fleet. Oil Brokerage’s Ting Jun Jie put it as any capacity return being gradual rather than immediate.

The other regimes have a veto in practice. Bloomberg’s assessment is direct. The European Union and the United Kingdom not only blacklist vessels themselves but dominate maritime insurance cover, potentially limiting unilateral efforts.

That third point is the one to sit with. A significant limiting factor on a U.S. policy decision is the position of two other jurisdictions and the insurance market that answers to them.

There is precedent for individual vessels moving back. The supertanker Kiara M was blacklisted in December for supporting the Venezuelan oil trade, then removed from the list in March after Washington moved Caracas’s oil trade into the mainstream. A wider program meets the hurdles above.

What London Did

The UK package announced on 8 October comprised 26 designations and 12 ship specifications under the Russia regime. It added Russian oil companies Zarubezhneft and INK Capital to a list that already included Rosneft and Lukoil, on the basis that broader coverage makes it harder for sanctioned producers to sell crude through companies not yet listed. The UK says more than 90 percent of Russia’s oil production capacity is now under its sanctions.

The twelve vessels take Britain’s total of specified shadow fleet oil tankers past 600. Among them is the 22-year-old product tanker Dakar, specified while making a late-season voyage along Russia’s Northern Sea Route.

The package also targeted financial infrastructure, listing three cryptocurrency exchanges, two payment platforms, and an individual linked to financial transactions, with several targets connected to Kyrgyzstan. Two of the platforms have processed transactions involving the Kremlin-backed A7 network, which claimed to have moved more than $90 billion last year, an amount Britain put at roughly half of Russia’s annual military spending. A further 17 individuals and entities were listed over supply of machine tools, electronics, and components used in ballistic missile and drone manufacture.

On 15 October, British finance minister John Healey called for tougher international restrictions on the maritime services supporting Russia’s shadow fleet. That is the same services layer that would have to function for any converted vessel to trade.

One qualification worth carrying. The claim that sanctions now cover more than 90 percent of Russian oil production capacity does not mean an equivalent share of production has stopped. Russian oil continues to reach international markets through networks that have adapted.

Designation Is Not One Thing

Before considering the divergence, it is worth being precise about what a UK listing does, because this is where most commentary goes wrong.

The UK distinguishes between designations, which apply to persons and entities, and specifications, which apply to ships. They are different mechanisms with different consequences.

A specified ship may be subject to shipping sanctions, trade restrictions, or both, and the restrictions attached vary by vessel according to the purposes for which it was specified. The UK Sanctions List records the particular restrictions applying to each one. Newer trade restrictions do not automatically apply to every previously specified vessel.

So a specified vessel is not automatically equivalent to a financially designated person subject to every asset freeze prohibition. The question for any fixture is which restrictions attach to that hull, which parties are caught, and what activity is proposed.

The Screening Problem a Sale Creates

A licensed transaction and a change of vessel ownership raise different due diligence questions, and the legal effect of Washington’s process remains unknown.

Wright described an approval mechanism without specifying whether converted vessels would be removed from OFAC’s vessel listings, remain listed subject to specific authorizations, or receive some other treatment. His own statement that there is no removing of sanctions points away from delisting, but the instrument has not been published.

What is certain is that a change of ownership does not by itself remove a vessel’s sanctions restrictions. OFAC lists vessels on the SDN list in their own right, identified by IMO number, and a transfer of ownership does not automatically release blocked property without appropriate authorization. Even where a new owner has no sanctioned connections, the hull may remain listed in the United States, the United Kingdom, or the European Union.

That makes vessel-level screening essential, and it is the part most programs do least well.

Screen the hull as well as the counterparty. Ownership analysis establishes who controls the asset. It does not establish whether the vessel itself carries restrictions. As we set out in the piece on the 50 percent rule, a clean ownership calculation answers a question about an entity, not about a ship.

The IMO number survives the sale. Whatever happens to ownership records, the hull keeps its identifier, and that is what the UK specifies against. A screening process keyed only to company names will not see it.

Establish the designation history and the scope of any authorization. A purchaser, charterer, broker, or insurer needs to know what the vessel was doing before, what restrictions attach now in each relevant jurisdiction, and precisely what any U.S. approval permits. Those are three separate enquiries.

The broader point stands. A U.S. operator, a UK operator, and an EU operator looking at the same vessel may each reach a different and correct conclusion. Group structures spanning those jurisdictions have to answer the question entity by entity.

Where You Actually Screen

This has changed and the change is operationally important.

The OFSI Consolidated List of Asset Freeze Targets closed on 28 January 2026. It is no longer updated and remains online for reference only. The FCDO’s UK Sanctions List is now the single source for all UK sanctions designations and specifications, including ships.

OFSI remains responsible for implementing financial sanctions. It no longer maintains a separate current list.

The UK also keeps a separate list of entities subject to financial and investment restrictions under the Russia regime, which sits apart from the main Sanctions List. Checking one is not checking both.

A screening record built around OFSI as a list source is now checking a frozen database, which is a compliance failure with a timestamp on it.

Where It Hits the Insurance

This is the consequence most likely to catch an operator out, and Bloomberg’s reporting has now made it a central obstacle to U.S. policy rather than a technicality.

Three different things can produce the same practical outcome and they need separating.

Legally prohibited. Applicable sanctions prevent the insurer from underwriting the risk or making payment. The UK’s maritime sanctions guidance treats direct insurance, reinsurance, retrocession, and insurance intermediation as relevant financial services, and restrictions on specified ships can create further barriers to maritime services.

Contractually excluded. The policy’s own sanctions limitation or exclusion provision cuts off the insurer’s obligations, independently of whether the law prohibits anything.

Commercially unavailable. The insurer declines a risk it could lawfully write.

Marine policies commonly carry sanctions limitation or exclusion provisions, and insurers must comply with sanctions legislation independently of what the wording says. For International Group clubs and marine insurers operating internationally, the relevant restrictions may include UK, EU, U.S., and other measures depending on the insurer, the insured parties, the reinsurers, and the transaction.

The practical point is this. A vessel that becomes employable under U.S. rules may still not be insurable, if it remains specified under a regime the insurer answers to. Cover may be legally prohibited, contractually excluded, or commercially unavailable, and the three have different answers and different fixes.

That can leave an otherwise authorized voyage without the insurance required to perform it commercially. It is the same shape as the problem we described with the Iranian permit regime, where satisfying one authority created exposure under another.

Three things follow.

Read your sanctions exclusion and identify which regimes it references. That determines whether a U.S. approval assists you at all.

Establish which of the three problems you have before you fix. A legal prohibition requires an applicable exception or a regulatory authorization. A contractual exclusion may be negotiable. Commercial unavailability may be solvable through another market.

Do not treat U.S. approval as a representation about cover. No underwriter will accept that reading after a casualty.

Where It Hits the Charter Party

Sanctions clauses vary considerably in how they allocate the risk of conflicting regimes, and the wording matters more now than it has.

BIMCO’s 2020 sanctions clauses define sanctioning authorities broadly, covering the UN, EU, UK, U.S., and other applicable authorities, and BIMCO’s accompanying notes contemplate the possibility that different states impose conflicting restrictions, potentially giving both parties rights under the clause at once. The standard forms anticipated the problem. They do not eliminate it, and older, amended, and bespoke wordings handle it differently or not at all.

Six things to check.

Which authorities the clause names. Many bespoke clauses refer to applicable sanctions without saying whose.

Whether the clause is unilateral or mutual. An owner entitled to refuse a voyage that would breach sanctions applicable to it, facing a charterer entitled to order a voyage lawful under its own regime, is a dispute rather than a contract.

What triggers the right to refuse. Actual listing is one standard. Reasonable belief of exposure is considerably wider and will be invoked more often in a divergent environment.

How a converted vessel is treated. Where a vessel receives U.S. authorization but remains specified by another authority, assess whether your clause continues to classify it as a sanctioned party. BIMCO’s 2020 definition is broad enough to capture independently designated vessels, so the clause may well bite. Bespoke wordings and the treatment of licenses may produce different results.

Whether the chain is back to back. As with the port fee clauses, an intermediate charterer with different wording on each side absorbs the problem.

What happens to performance and liability if both parties validly invoke the clause in opposite directions. BIMCO’s own guidance in that scenario is to take legal advice, which tells you how settled it is.

What Operators Should Do

Screen the hull, not just the counterparty. The UK specifies ships by IMO number and that number survives a change of ownership. Vessel-level screening is the part that catches this case.

Screen against every applicable regime and record which. Build the output so it identifies OFAC, the UK Sanctions List, the separate UK financial and investment restrictions list, EU measures, and any other relevant source separately, with the date, the matches, the restrictions attached, and the authorization position. A single clean or not clean result is no longer a usable answer.

Update your UK source. If your process still points at the OFSI Consolidated List, it has been checking a closed database since January.

Ask about recent ownership changes and designation history. A vessel that changed hands recently warrants a look at what it was doing before and what restrictions survived the transfer.

Rescreen more often. One regime is adding vessels while another is working out how to move them the other way. Screening at fixture is no longer the same as screening at the voyage.

Map your group by jurisdiction. The same fixture may be available to one entity and prohibited to another.

Watch the services layer. Britain is explicitly targeting the maritime services supporting the shadow fleet, which reaches insurance, flag, classification, brokerage, and finance. You can be clear on the vessel and exposed through a service provider.

Take advice on the scope of any authorization. Permission to buy a vessel, permission to employ it, and removal from a list are not the same thing, and the difference will decide what you can actually do with the ship.

The Bottom Line

Working to the strictest applicable prohibition remains a sound way to avoid committing a sanctions violation. What is failing is something narrower and more practical. Treating one jurisdiction’s clearance, or the absence of a name from a single list, as sufficient authorization for an international transaction.

Washington is moving toward a process for converting sanctioned tankers into vessels eligible for legitimate trade, driven by freight rates and fuel prices ahead of the November election. London is tightening and pressing allies to restrict exactly the maritime services that would make those vessels usable. Both positions are internally coherent. They do not reconcile.

The market has begun to quantify the gap. Oil Brokerage puts the number of sanctioned tankers outside EU and UK penalties at 294, and the number actually available for mainstream employment at around 75. Wright’s own estimate of the dark fleet is 1,600. Those figures describe differently defined populations and should not be read as a precise proportion, but the direction is unmistakable. A significant constraint on American policy here is not American law.

So the answer depends on who is asking. Your nationality, your insurer’s regulator, your bank’s jurisdiction, and your charterer’s incorporation can each produce a different result on the same hull.

Screening that returns a single answer is no longer screening. It is a guess with a timestamp.