Refueling Risks: Sanctions exposures related to bunker operations

By Claire Grunewald

The prolonged U.S.-Iran war and closure of the Strait of Hormuz continue to constrain global bunker fuel supplies, with some ships waiting almost two weeks or adding hundreds of extra miles to voyages to source bunker from alternative ports, according to reporting by the Financial Times. This environment of low supply and high demand create an incentive for suppliers to purchase bunker from alternative sources and vessels to obfuscate identities, registration, or ownership to receive bunker, increasing risks for operators of dealing with sanctioned cargos or entities. These heightened risks come at a time when regulators are cracking down on bunkering operations supporting shadow fleet movement and maritime evasion of U.S., UK, and EU sanctions.

Bunkering is the process of a vessel loading fuel on board for its own consumption – think a car refueling at a gas station, except the “stations” here are either berths, designated anchorages, or at sea. Depending on location, fuel is transferred to the receiving vessel either via barge, pipeline, truck, or offshore bunkering vessel. The fuel itself is the energy-dense, tar-like residue left after refineries extract higher-value products from oil. A typical VLCC carrying a full tank of Very Low Sulphur Fuel Oil (VLSFO) can travel over 20,000 nautical miles (New York to Singapore and back) before needing to refuel. Bunker operations involve the interests of various maritime stakeholders, including ship owners/operators, bunker suppliers, traders, brokers, barging companies, storage companies, surveyors, port authorities, P&I clubs, and equipment manufacturers, and ensuring they are conducted safely and efficiently is crucial. Several industry associations such as BIMCO publish specific guidance on bunkering, along with bunker operation clauses for charter party contracts to promote best practices across industry participants.

As with other maritime services, shadow fleet vessels, sanctioned and non-sanctioned, have found alternative means for accessing bunker to keep Iranian and Russian (and historically, Venezuelan) cargos moving. For example, off the coast of Malaysia and Singapore in the Eastern Outer Port Limits (a known hub for evasive ship-to-ship transfers of Iranian and Russian oil) bunker vessels regularly service sanctioned tankers, with some lingering for weeks to fill up with Iranian or Russia oil from passing tankers and redistribute to other vessels, according to reporting from The Wall Street Journal. 

Due to its vital nature of keeping global maritime trade moving, bunkering has historically been exempted from global sanctions regimes, either entirely or via authorizations. For example, under the Price Cap the United States, UK, and EU all exempt bunkering as a covered service, meaning operators can provide bunker services to non-sanctioned vessels carrying Russian-origin oil without needing to first verify if the cargo is in compliance with the relevant price cap. Under OFAC’s Cuba sanctions regulations, foreign companies owned or controlled by US persons are authorized to engage in transactions ordinarily incident to the bunkering of vessels owned or controlled by, or chartered to, Cuba or Cuban nationals. Further, until recently, OFAC has also authorized the provision of bunkers or bunkering services to non-Iranian vessels transporting passengers or goods to or from Iran, subject to conditions.

Regulators, however, are increasingly seeing the importance of bunker operations and the role of bunkering service providers as points of leverage to increase pressure within sanctions regimes. In 2019, OFAC imposed further sanctions on Iran’s shipping and oil sectors and created secondary sanctions risks for vessels and shipowners providing bunkering services to non-Iranian vessels carrying petroleum or petroleum products from Iran. Recently, OFAC has focused targeting efforts on entities and vessels providing services to support Iranian vessels, NIOC, or vessels designated for carrying Iranian oil. In April 2025, OFAC designated Glory International FZ LLC, whose vessels were selected in contracts with NIOC to provide bunkering services in Iranian waters. As part of the launch of Operation “Economic Outcast” in August 2026, OFAC designated Hong-Kong based Shipoil Limited and its sister companies for coordinating with various Iranian entities to provide bunkering services for vessels transporting Iranian crude oil and petrochemical product. This was quickly followed by OFAC's indefinite suspension the authorization for bunkering for non-Iranian carriers transporting passengers or goods to or from Iran. 

The sanctions risks for those involved in bunkering operations are not limited to U.S. sanctions. On the same day OFAC indefinitely suspended its Iran-related bunkering authorization, the UK also announced amendments to its Iran sanctions program, including the expansion of transport restrictions and new powers to specify ships and restrict their operations and related services. In addition, the EU's 21st Sanctions Package adopted in late July explicitly broadens maritime restrictions to target bunkering, refueling, and ship-to-ship transfer services for vessels supporting Russia’s shadow fleet. The EU used these widened criteria to target, for the first time, five bunkering tankers alleged to have regularly refueled designated vessels.

Across all three regimes suppliers, traders, brokers, and terminal operators face increasing sanctions risk for supplying bunker directly or indirectly, to sanctioned vessels or non-sanctioned vessels frequently involved in the transport of sanctioned oil products. All these parties should ensure they have controls in place commensurate to their exposure, particularly operators in the Middle East and Southeast Asia. Bunkering providers should review their internal processes and controls for vessel review and acceptance. Adequate screening and due diligence of bunker purchases and receiving vessels remains crucial, especially when shadow fleet tankers are increasingly broadcasting fraudulent flags and obfuscating voyage history through location data manipulation. These parties should also ensure their contractual arrangements contain sufficient clauses to protect them should they choose to refuse to stem bunker for a vessel under a completed contract.

In addition, there is risk for ship owners/operators of vessels that unknowingly stem sanctioned cargo in regions with regular Iranian and Russian oil transshipment. So far there have been no public enforcement actions to date against vessels that have stemmed sanctioned fuel, likely due to the difficulty in ascertaining this information. However, given the United States’ laser focus on Iran and the shipping sector, requesting additional cargo documentation such as certificates or origin and electronic bunker delivery notes is recommended.