Miami (Times Of Ocean)- As part of an elaborate sanctions-busting scheme involving forged documents and the repainting of ship decks to conceal illegal shipments, the U.S. has quietly seized the cargo of two tankers suspected of transporting Iranian oil.
Previously unreported details of the seizure were contained in a federal civil case unsealed last month after Greek-managed vessels discharged their valuable cargo, worth upwards of $38 million, in Houston and the Bahamas at the direction of U.S. law enforcement.
As part of the Biden administration’s efforts to revive the 2015 nuclear deal with Iran, the U.S. is likely to lift punishing sanctions against Iran in exchange for the seizure. In response to Putin’s invasion of Ukraine and the U.S. decision to retaliate, the U.S. banned all Russian oil imports, potentially removing 10 million barrels of oil a day from Western markets. Iran could make up for some of that lost supply, as it pumped an average of 2.4 million barrels per day in 2021, but due to sanctions has been able to sell less than half.
Iran’s adversaries warn that even as Ukraine’s geopolitical calculations splinter and the United States turns its attention to Russia, the Biden administration must not ease pressure on the Islamic Republic. The U.S. considers Iran a state sponsor of terrorism and a supporter of Hezbollah and other militant groups in the Middle East, as well as the Islamic Revolutionary Guard Corps.
“This seizure serves as a perfect example of why the U.S. should not lift sanctions,” said Claire Jungman, the chief of staff at the New York-based group United Against Nuclear Iran, which closely tracks Iran’s crude shipments. “We should continue to work to ensure that the IRGC cannot use profits from its sale of Iranian oil to fund terrorism and other activities that threaten the safety and security of all Americans.”
The journey that ended with the U.S. seizure began in fall 2020 when the M/T Stark I, an Iranian-owned vessel under U.S. sanctions since 2018, repainted its deck in an apparent attempt to evade detection by satellite imagery. The vessel pulled into a terminal on Iran’s Kharg Island on Oct. 31, 2020, and loaded up with oil.
On Nov. 3, 2020, 733,876 barrels of oil were transferred at sea to another tanker, the M/T Arina. In the dangerous ship-to-ship transfer, both vessels turned off their transponders – a mandatory safety device on all large ships – to avoid being tracked by ship tracking databases, satellite imagery, and data shared by Jungman.
As oil prices have risen over the past year, Iran has seen a windfall of revenue despite US sanctions. The smuggling operation involves dozens of privately owned, foreign-flagged tankers – dubbed a “ghost armada” by Jungman – which implement a variety of sophisticated methods to hide their movements. Tankers owned by U.S. companies, such as a subsidiary of Oaktree Capital Management, have also been implicated in the brisk, black market trade.
Despite a cat-and-mouse game, ship tracking technology has helped detect sanctions-evading behavior by Iran as well as Venezuela, whose oil industry is also subject to U.S. export restrictions. In fact, seizing oil shipments is rare: it had only been done twice before.
Part of the proceeds from the sale of forfeited cargoes go to compensate terrorism victims in the United States.
A civil complaint filed in Washington federal court alleges that the Panama-flagged Arina, whose last listed manager is Athens-based Saint James Shipping Ltd., had been known to ship illegal Iranian crude in the past. False documents were created to indicate the crude transported by the ship originated in Oman earlier in 2020 and again on its latest suspect voyage, prosecutors allege.
Saint James Shipping could not be reached and a website believed to belong to the company was unavailable.
On its way to the Suez Canal, the Arina encountered numerous delays along the way. It eventually sailed to Istanbul, Turkey, where it underwent repairs, and then to Romania, according to Jungman’s analysis of ship tracking data.
The manager of the ship failed to find a buyer for the Iranian oil throughout the voyage. prosecutors allege in their complaint that on Aug. 26, 2021, it transferred part of its cargo – approximately 220,793 barrels – to another ship, the M/T Nostos, off the coast of Cyprus. In response to an email and a phone call seeking comment, Piraeus-based Eurotankers, the last listed manager of the Liberia-flagged Nostos, didn’t immediately respond.
According to Jungman, both vessels attempted to discharge the oil at a storage facility in Turkey. Instead, they were detected by U.S. authorities and ordered to unload their cargo, which the Nostos did in Houston around Thanksgiving last year and Arina in the Bahamas, according to Jungman.
Following the 2015 nuclear deal with world powers, Iran has regained the ability to sell oil openly on the international market. In 2018, then-President Donald Trump unilaterally reimposed American sanctions and withdrawn from the accord. Iran lost much of its lucrative oil trade, a major economic and political engine.
Recently, Iranian officials have suggested they’ve been able to sell crude oil despite American sanctions. According to the state-run IRAN newspaper, the Central Bank of Iran issued statistics at the start of February indicating that it made $18.6 billion in oil sales in the first half of this Persian year compared to $8.5 billion during the same period last year.