26/06/08
US sanctions will limit shipper engagement with PGSA
Dubai, 8 June (Argus) — Any vessels engaging with Iran's new Persian Gulf Strait
Authority (PGSA) to secure safe passage through the strait of Hormuz are highly
unlikely to be owned or chartered by major tanker operators or oil companies,
and will be making any toll payments to Iran without using US dollars, shipping
sources tell Argus. Tehran established the PGSA at the start of May to assert
control over shipping passing through the strait, access to which Iran has
severely restricted since the start of the US-Iran war at the end of February.
The PGSA said this week that more than 300 non-Iranian vessels had submitted
information to it since it began operations to secure safe passage through the
waterway. About 42pc of the vessels were oil tankers and 8pc LNG carriers, it
said. Around 77pc of vessels submitting requests were looking to exit the
strait, and 23pc looking to enter, it added, noting that of those vessels
looking to exit, around 28pc were destined for China, 19pc for India and another
23pc for elsewhere in Asia. The US Treasury Department's Office of Foreign
Assets Control (Ofac) imposed sanctions on the PGSA at the end of May, and this
will act as a serious deterrent to major listed oil companies and tanker
operators from engaging with Iran, shipping sources say. "Large shipping
companies are typically publicly listed and can't simply make payments to Iran
for transit," one broker says. "Every financial transaction is closely
monitored, and payments are usually conducted in US dollars. Falling under Ofac
sanctions would carry significant consequences, including the freezing of assets
and accounts, making the risks substantial." Shadow play But the situation may
be different for vessels in the so-called "shadow fleet" that has handled
sanctioned trade in Russian, Iranian and Venezuelan oil in recent years, other
sources suggest, or for shipowners from countries such as China that have been
less concerned about US sanctions. Operators of such vessels may be able to
limit their exposure to Ofac sanctions risk by settling any payments to the PGSA
using local currencies such as the Chinese yuan, or via alternative mechanisms
like cryptocurrency transfers. It is even possible, a shipping consultant
suggests, that Iran may be looking at payment in kind, from the vessel's flag
state or beneficiary state, such as military equipment or aid, which would also
make it hard for Ofac to link payment directly to the actual transit. Insurance
is another consideration that would limit engagement with the PGSA, shipping
sources add. "Any international insurer will have warranties on their war
policies meaning normal [non-"shadow fleet"] ships cannot pay any money to
[Iran's] Islamic Revolutionary Guard Corps (IRGC)," one insurance broker notes.
That would deter a shipper from paying a toll to the PGSA, the broker said,
although it might not necessarily prevent them from contacting the authority for
permission to transit the strait. Ofac's sanctions statement explicitly linked
the PGSA to the IRGC, noting that it "extorts vessels transiting the strait of
Hormuz through the so-called Persian Gulf Strait Authority, a government agency
aimed at imposing illegitimate tolls on commercial traffic". Some shipping
sources also remain sceptical of the PGSA's claims, which are hard to verify
given that the few vessels still moving through Hormuz routinely turn off their
transponders to disguise identity and reduce the risk of attack. "I don't
believe 300 owners signed up for this," a shipping source with one oil company
tells Argus. "I think this is one of their media plays." By Anna Cherkizova,
Nader Itayim and Sean Lui Mideast Gulf crude export infrastructure Send comments
and request more information at feedback@argusmedia.com Copyright © 2026. Argus
Media group . All rights reserved.
