Panama has ramped up its crackdown on sanctioned vessels by revoking the registration of 128 ships, a move primarily targeting the "shadow fleet" facilitating oil exports from Russia and Iran. According to Bloomberg, Ramón Franco, director general of merchant marine at the Panama Maritime Authority, confirmed that at least 70 tankers have already been removed from the registry, with more to follow. This decision aligns with broader international efforts to enforce sanctions and curb illicit energy trade.

Merchant ships often sail under flags of convenience, which provide regulatory benefits but also present risks of abuse. Bloomberg notes that the small Central American country, home to the world’s largest shipping registry with over 8,000 vessels, has been under increasing pressure to uphold global sanctions. The deregistration process, which previously took up to six months, has now been streamlined to just a few weeks, reflecting Panama’s commitment to regulatory tightening.

In February, Panama's Maritime Authority (AMP) announced that its fleet had reached a 96.5% compliance rate with international maritime safety and environmental protection standards, up from 96% in 2023.

The achievement followed criticism from US officials and lawmakers who have accused Panama of allowing sanctioned countries, including Russia, Iran, and Venezuela, to operate vessels under its flag. It also came in the wake of another major dispute that saw US President Donald Trump threatening to take control of the Panama Canal over alleged Chinese influence.

The ban comes amid heightened scrutiny of Russia’s and Iran’s oil exports, as Western sanctions aim to limit their revenues. As reported by Newsweek, Russia has relied on a network of ageing, often uninsured vessels to circumvent restrictions, selling oil above the G7-imposed $60-per-barrel cap. Similarly, the US Treasury has highlighted Iran’s use of intermediaries in the UAE, China, and other jurisdictions to sustain The ban comes amid heightened scrutiny of Russia’s and Iran’s oil exports, as Western sanctions aim to limit their revenuesm trade despite sanctions. The US Department of State has imposed consecutive rounds of sanctions on entities facilitating these transactions, reinforcing the effort to disrupt illicit oil flows.

Beyond Panama, other enforcement actions against shadow fleets have gained momentum. In Germany, authorities recently seized the tanker Eventin, suspected of carrying Russian oil in violation of EU sanctions, as reported by DW. Meanwhile, US authorities have blacklisted several vessels linked to Iranian oil exports, warning that engaging in such trade exposes companies to significant sanctions risks.

While Panama’s decision will cause a financial loss—an estimated $2mn in revenue—it points to a shift towards stricter oversight. The move has been welcomed by advocacy groups, such as UK Friends of Ukraine, which called for even stronger measures against Russia’s energy trade.

With increasing global scrutiny on flag-of-convenience registries, Panama’s actions may serve as a precedent for other nations. The battle against illicit oil shipments continues, and as enforcement mechanisms tighten, operators of sanctioned vessels may find fewer avenues to evade restrictions.