US sells seized Iranian fuel cargoes: Update

Updates with details throughout

The US Department of Justice has sold the 1.16mn bl of Iranian-sourced fuel confiscated in August aboard four tankers that allegedly were delivering it to Venezuela.

"The US has now sold and delivered that petroleum," assistant attorney general John Demers told reporters today.US attorneys interchangeably described the cargoes as gasoil, gasoline and refined oil, but the State Department's special Venezuela and Iran envoy, Elliott Abrams, today described it as gasoline intended for delivery to Venezuela.

The US District Court for the District of Columbia in July authorized US government agents to seize the cargoes aboard four Greek-owned, Liberia-flagged tankers — the Bella, the Bering, the Luna and the Pandi. "Upon being presented with the court's seizure order, the ships' owner transferred the petroleum to the government," Demers said.

The sale netted around $40mn, which the US Justice Department says eventually will be used to satisfy claims filed in the past decades by US citizens against Iran. But for now, the money is sitting in a government holding account because shippers based in the UAE, Oman and the UK last month told the federal court they hold title to the cargoes.

UAE-based Mobin International, UK-based Oman Fuel and Oman-based Sohar Fuel told the court they were transporting it to Trinidad and Tobago, for sale to customers in Peru and Colombia. Tehran labeled the US seizure of the cargoes as "piracy" but said Iran no longer held title to the cargoes aboard the tankers.

The forfeiture complaint filed by the Department of Justice describes Mobin, Oman Fuel and Sohar Fuel as front companies used by Tehran to facilitate the sale. The Treasury Department earlier this week imposed sanctions on two of those shippers, Mobin and Oman Fuel, but Sohar Fuel was not targeted.

"The claimants will have an opportunity to litigate their claims in a US district court," the Department of Justice said. "Once the claims are dismissed, to the greatest extent possible, the funds will go into the US Victims of Terrorism Fund." At least part of the cargoes appears to have been offloaded at Kinder Morgan's Carteret Terminal in New Jersey earlier this month.

Washington claimed jurisdiction over the cargoes by stating that the ultimate beneficiary of all Iranian oil exports is Iran's Islamic Revolutionary Guard Corps, a paramilitary group the US labels a "terrorist organization." The alleged link allows US prosecutors to tap counter-terrorism authorities in pursuit of Iranian cargoes.

The seizure is the first successful attempt by the US authorities to confiscate Iranian cargoes since the re-imposition of a sanctions ban on all exports from Iran in May 2019 — two previous attempts failed to secure Iranian tankers at foreign ports.

Iran in May-June and again in September-October used tankers owned by national company NIOC to deliver a total of eight cargoes of gasoline and alkalyte to Venezuela, helping to temporarily alleviate a severe gasoline shortage in Venezuela. Washington subsequently vowed to disrupt further deliveries of Iranian fuel to Venezuela but can point to success only in the case of cargoes being transported aboard tankers not carrying the Iranian flag.

"I expect them to continue to try," Abrams said today. "What we have been able to do is to get just about anyone else in the world out of that trade, except for Iran, using Iranian tankers."

By Haik Gugarats