Stranded Iranian tankers await Brazil court ruling

A favorable federal supreme court decision could be the best hope for two Iranian tankers awaiting marine fuel in Paranagua Bay off Brazil´s southern coast, bunker market participants tell Argus.

Since early June, two Iranian-flagged grain vessels, the Bavand and Termeh, owned by Islamic Republic of Iran Shipping Lines and operated by Iranian shipping firm Sapid, have been requesting fuel for a return journey after discharging urea cargoes to Brazilian firm Eleva.

Transpetro, the logistics arm of Brazil´s state-controlled Petrobras, denied a request to refuel the vessels, citing US sanctions. The possible sanctions-related impacts mentioned by PBR included blocked assets; prohibition to transact with companies or individuals subject to US law; and anticipation of the maturity of around $78bn in debt with foreign institutions.

Eleva last week was awarded a local court injunction obligating Petrobras to supply 1,700 tons of fuel to the vessels under threat of fines. The matter now heads to the federal supreme court, which is scheduled to return to its normal agenda on 1 August.

On 19 July, Brazil's general prosecutor Raquel Dodge filed a memo urging the high court to overturn the injunction.

In her petition, Dodge wrote that "the serious consequences for the order and the public economy that the fulfillment of the objectionable decision can cause, not only for Petrobras, but also for the Brazilian state, are evident, since the federal government is the majority shareholder of [Petrobras]."

The Bavand already loaded 48,000 t of corn at Imbituba port in Santa Catarina, a Paranagua port operator said. The Termeh is waiting for bunker before traveling to the same port for a 65,000 t cargo of corn.

Food is outside the scope of US sanctions, but urea is covered. Islamic Republic of Iran Shipping Lines, Sapid and Eleva were not available to comment.

"I've had eight or nine people call asking how to resolve this situation, but without Petrobras almost all options are either too risky or not economically feasible," a marine fuel specialist with a global bunker company said.

In theory, the vessels can purchase fuel from suppliers other than Petrobras, or send fuel from Iran to supply the ships. But many bunker suppliers operating in Brazil are unwilling to risk non-compliance with sanctions.

Even if a company is willing to take the risk, the restrictions on portside refueling means the vessels would likely have to make it to international waters for a ship-to-ship transfer, another bunker specialist said.

Rio de Janeiro-based marine fuel supplier NFX, a 50:50 joint venture between BP and Brazilian logistics firm Prumo, says no representatives for the vessels have been in contact to discuss refueling.

Phone calls and emails to Iran´s embassy in Brasilia were not answered.

The predicament comes against the backdrop of a recent strengthening of ties between Brazil and the US, influenced partly by far-right president Jair Bolsonaro's affinity for US president Donald Trump.

The situation comes amid rising international tensions following Iran's seizure of the UK-flagged Medium Range (MR) oil tanker Stena Impero in the strait of Hormuz on 19 July.