By Eirini Diamantara & Dimitris Roumeliotis
One of the most defining developments in contemporary maritime dynamics is the increasingly distorted relationship between fleet aging, sanctions exposure, and demolition activity. While both the tanker and dry bulk sectors face aging fleet profiles, sanctions are influencing these markets in fundamentally different ways, creating a distinct two-tier structure in global shipping.
Sanctions remain overwhelmingly concentrated within energy-related trades. Currently, 927 tankers, approximately 11.6% of the total tanker fleet, are identified as sanctioned. Conversely, the dry bulk sector remains largely insulated, with only 65 sanctioned vessels, representing just 0.4% of the fleet.
The age distribution of these vessels is telling. In the tanker segment, nearly 93% of sanctioned units are over 16 years old. Staggeringly, 441 vessels fall into the 21–25-year bracket. Under normal market conditions, these vessels would have long exited the market; however, employment within opaque, sanctions-linked trading networks has artificially extended their commercial lifespan. Within dry bulk, while the majority of sanctioned units (56 out of 65) are also over 16 years old, the absolute volume is insufficient to cause the same structural distortion observed in tankers.
The tanker segment’s composition is particularly critical for market balance. Sanctioned tonnage is heavily concentrated in larger crude and dirty-product categories: Aframax/LR2 vessels account for 324 units (26% of their total fleet), followed by VLCC/ULCC (160 units/18%) and Suezmaxes (118 units/17%). While these vessels remain technically active, they are largely excluded from mainstream chartering, banking, and insurance networks. This effectively creates a "hidden" fleet, tightening the availability of compliant, high-quality tonnage even as the total fleet count continues to rise on paper. This "hidden" fleet now faces an uncertain future: as Venezuelan sanctions lift, Russian waivers fluctuate due to the ongoing Gulf war, and the trajectory of Iranian sanctions remains unpredictable.
Despite the dampening effect that healthy freight rates have had on demolition activity over the past few years, a shift is imminent. In dry bulk, recycling remains moderate, 30 vessels (1.51 million dwt) were demolished in the first four months of 2026. While consistent with long-term trends, this pace is significantly slower than the aggressive activity seen in late 2025, though it remains higher than in the same period from 2022 to 2025. In contrast, tanker demolition remains restrained relative to the fleet’s vintage profile. Only 19 tankers were scrapped in the first four months of 2026. While this is an improvement over the near-zero activity seen in early 2023 and 2024—and slightly higher than the 14 vessels scrapped in 2025—it pales in comparison to the scale of the aging tanker fleet. While "shadow" employment has been the primary barrier to a meaningful recycling wave, as these opportunities vanish, more owners are finally seeking to guide their aging vessels toward the scrapyards. Compounding this, scrap prices in 2026 have cooled, failing to incentivize demolition. Current rates stand at $410–430/ldt in India, $460–480/ldt in Bangladesh, $450–460/ldt in Pakistan, and $280–285/ldt in Turkey—levels roughly 5% lower than in May 2025 and 19% lower than in May 2023.
As the "shadow" fleet faces diminishing utility and economic pressures mount, the industry stands at an inflection point. Whether the anticipated wave of demolition materializes will depend on the delicate balance between softening scrap prices and the inevitable obsolescence of aging, sanctions-burdened tonnage.
Data source: Xclusiv Shipbrokers Inc.