Has American President Donald Trump launched a trade war? How will his latest moves affect your organization? And what can you do to remain prepared for the coming impact on the global supply chain and changing trade routes? A Quick Recap Things are changing so quickly, it’s hard to keep up! First, President Trump backed...
Recent events in the Baltic and Northern seas highlight the growing vulnerability of critical undersea infrastructure systems and the geopolitical complexities tied to their security. These critical lifelines are under increasing threat. With damage – both accidental and deliberate – on the rise, the fragile nature of this infrastructure is coming into sharper focus. This...
The Stop Harboring Iranian Petroleum Act(SHIP Act) was enacted as part of the Emergency Supplemental Appropriations for the 2024 Fiscal Year. It aims to impose sanctions on foreign individuals and entities involved in the trade of petroleum and petroleum products originating in Iran. It specifically targets the shadow fleet of tankers and illicit operators that facilitate the movement of Iranian oil, often through deceptive practices like ship-to-ship transfers, primarily to buyers in Asia, including China.
Why is the SHIP Act Necessary?
The SHIP Act addresses the significant challenges posed by Iran’s shadow oil trade, which undermines international sanctions designed to curb its nuclear ambitions, missile development, and regional destabilization efforts. Iran employs deceptive practices, such as ship-to-ship transfers and false documentation, to evade detection and continue exporting oil, particularly to nations like China. These illicit revenues finance activities that threaten regional and global security, including supporting militant groups and expanding its weapons programs. By targeting the enablers of these transactions, the SHIP Act aims to disrupt the flow of funds critical to Iran’s destabilizing activities.
The SHIP Act also imposes stricter sanctions on entities and individuals involved in facilitating these covert operations. It underscores the commitment to maintaining the integrity of international sanctions, deterring other nations and entities from engaging in similar violations. The legislation also seeks to close gaps in existing measures by addressing emerging tactics used in the shadow fleet, ensuring that efforts to isolate Iran economically remain effective and up-to-date with evolving threats.
What Activities Does the SHIP Act Target?
The SHIP Act targets the following activities:
Use of shadow fleets: vessels that covertly transport Iranian oil by evading detection
Ship-to-ship transfers: instances where two ships meet in the open sea or at the outer port limit. While there is nothing inherently wrong with two ships meeting, this practice is often used to facilitate illegal shipping activities.
Falsification of cargo documents: manipulation of records to conceal the source of petroleum
Insurance and financial support: penalizing companies and financial institutions knowingly facilitating the illicit oil trade
Destination obfuscation: concealing the final buyers of the oil
Violation of sanctions: activities that circumvent or defy U.S. and international sanctions on Iranian petroleum
These measures aim to dismantle the networks enabling Iran’s shadow oil trade, reducing funding for destabilizing activities.
Who Does the SHIP Act Apply To?
Category
Details
Shipping companies
Operators of vessels involved in transporting Iranian oil, especially those using deceptive practices like AIS spoofing or ship-to-ship transfers
Insurance providers
Firms offering coverage for ships transporting Iranian petroleum, knowingly or unknowingly aiding the trade
Financial institutions
Banks and other entities financing transactions or operations tied to the illicit oil trade
Petroleum buyers
Countries and companies purchasing Iranian oil in violation of sanctions, such as major buyers in Asia
Facilitators
Individuals or groups enabling deceptive shipping practices, including document falsification and logistical support
How Does the SHIP Act Fit into Broader U.S. Sanctions Policy?
The SHIP Act complements existing measures and sanctions in place by addressing loopholes in enforcement, specifically targeting the shadow fleet and deceptive practices used to export Iranian petroleum. It helps reinforce the U.S.’s longstanding strategy to weaken Iran’s economy and its capacity to fund nuclear, missile, and proxy activities.
Specifically, this legislation aligns with prior sanctions outlined in executive orders and previous laws like the Iran Sanctions Act. It strengthens enforcement mechanisms, particularly in maritime and financial sectors, critical to Iran’s oil trade. By ensuring stricter compliance and broadening the scope of entities subject to penalties, the SHIP Act serves as an essential tool in upholding the integrity of U.S. and international sanctions regimes.
The following table shows how SHIP aligns with previously developed sanctions:
Targets Iran’s military, nuclear, and missile programs through financial and energy sector sanctions
Complements CAATSA by expanding the scope of sanctions to include global shipping and facilitation networks for Iranian oil
How Big of an Issue Are Iranian Oil Exports?
Iran’s oil exports pose a significant challenge to international sanctions efforts, primarily due to the deceptive shipping practices employed by Iran-linked vessels. According to Windward data, nearly 400 vessels connected to Iranian oil exports have been flagged by the Energy Information Administration (EIA) for activities that include falsified locations, dark operations where tracking is disabled, and ship-to-ship transfers in high-risk regions such as the Arabian Gulf, Malaysia, and Singapore.
These activities not only enable the circumvention of sanctions but also create challenges for monitoring and enforcement, as such tactics obscure the origin and destination of Iranian oil. The presence of “dark” and “gray” fleets, which are increasingly utilized for these evasive actions, has grown significantly, complicating efforts to clamp down on illicit trade and maintain global supply chain integrity.
This persistent evasion highlights the scale of Iran’s oil exports as a geopolitical and economic issue, necessitating advanced tracking and compliance technologies to address the problem effectively.
How Can Stakeholders Ensure Compliance with the SHIP Act?
The SHIP Act emphasizes heightened compliance requirements for maritime operations to curb illicit activities, such as sanctions evasion and deceptive shipping practices. Stakeholders can ensure compliance by adopting advanced technologies and strategies to monitor vessel behavior, identify high-risk operations, and maintain transparent supply chain practices. Windward’s Maritime AI™ is a critical tool in achieving these goals.
Key Steps to Ensure Compliance:
Leverage AI-powered insights: solutions such as Windward Maritime AI™ provide stakeholders with actionable intelligence by analyzing shipping patterns, and identifying suspicious activities. These capabilities enable real-time visibility and predictive risk assessment.
Conduct due diligence: comprehensive due diligence on vessel ownership, operational history, and affiliations is essential. Platforms like Windward ensure stakeholders can trace vessels’ ultimate beneficial owners and detect connections to sanctioned entities.
Monitor for deceptive shipping practices: the SHIP Act targets behaviors such as location tampering and ship-to-ship transfers. Windward’s solution detects these activities, allowing stakeholders to act promptly and avoid regulatory violations.
Stay updated on sanctions changes: the dynamic nature of global sanctions regimes requires constant monitoring. Windward’s platform integrates updates into its risk assessments, ensuring compliance with the latest regulations.
What is Data Fusion? Data fusion is the process of integrating data from multiple sources to create a unified, accurate, and comprehensive view. In the maritime industry, where data can often be noisy or fragmented, fusion eliminates inconsistencies and enables advanced AI models to deliver full visibility and actionable insights. Without data fusion, organizations face...
What is Commodity Trading? Commodity trading is the buying, selling, and exchanging of raw materials or primary goods. These goods are typically classified into two categories: hard commodities (like metals and energy resources) and soft commodities (such as agricultural products). Traders engage in this activity to profit from price fluctuations, hedge risks, or fulfill supply...
What is a Security Team in the Maritime Industry? A security team in the maritime industry is a specialized group tasked with ensuring the safety and security of vessels, crews, and cargo in maritime environments. They work for a variety of organizations and are essential in the planning and execution of commercial shipments that traverse...
What is Risk Mitigation? Risk mitigation refers to the process of identifying, assessing, and prioritizing risks, followed by the application of resources to minimize, control, or eliminate the impact of those risks on an organization. The goal of risk mitigation is to reduce the probability of a risk event occurring and to minimize negative consequences...
