US seizes another Iranian oil cargo

The US Department of Justice has asked a US court to authorize forfeiture of a 2mn bl Iranian oil cargo, the first such action under President Joe Biden's administration.

The Liberian-flagged Achilleas allegedly carried out a ship-to-ship transfer in October 2020 in the Gulf of Oman, near the UAE port of Fujairah, according to a forfeiture complaint filed by US federal attorneys at the US District Court for the District of Columbia. Washington claims jurisdiction over the cargo by stating that the ultimate beneficiary of all Iranian oil exports is Iran's Islamic Revolutionary Guard Corps (IRGC) that the US labels a "terrorist organization." The alleged link allows US prosecutors to tap counter-terrorism authorities in pursuit of Iranian cargoes.

The Achilleas is currently off the Brazilian coast and pointed toward the US Gulf of Mexico, having departed the Gulf of Oman in late December. The tanker allegedly was chartered by Fujairah International Oil and Gas to carry a cargo of "Basrah light crude oil" to China using a fraudulent bill of lading, according to the US attorneys. The US attorneys did not disclose how they came into possession of the cargo.

The transfer of the cargo to the US for sale is the second successful instance of US seizure of an Iranian cargo. The Justice Department last year sold the 1.16mn bl of Iranian-sourced fuel confiscated in August 2020 aboard four tankers that allegedly were delivering it to Venezuela. Two prior attempts in 2019 and 2020 failed to secure Iranian tankers at Gibraltar and the UAE.

The use of counter-terrorism legal authorities by Washington will present a challenge as Biden's administration is trying to revive the Iran nuclear deal. The international agreement promised Iran to lift all sanctions against its oil sector in exchange for Tehran's compliance with restrictions on its nuclear program. But former president Donald Trump's administration imposed additional sanctions under the counter-terrorism umbrella, which need to be either waived or revoked if Iran is to receive full sanctions relief.

Biden's administration, which has promised to begin outreach to Tehran to restore the nuclear deal, has yet to do so two weeks into its tenure. Neither secretary of state Tony Blinken nor special Iran envoy Rob Malley has spoken with Iranian officials yet, according to the State Department.

Tehran says that the US must provide sanctions relief before Iran resumes compliance, pointing out that the deal stopped functioning after a unilateral US withdrawal in 2018. Iranian foreign minister Mohammad Javad Zarif said yesterday the US and Iran could take concurrent steps to resume their participation.

But Washington for now says no. "There are many steps in that process: consulting with our allies, consulting with our partners, consulting with Congress before we are reaching the point where we are going to engage directly with the Iranians and willing to entertain any sort of proposals," the State Department said yesterday.

Chain of sales

Senior US officials still say that the policy of maximum sanctions pressure against Iran is not working well and that they need to move fast before Iran takes irreversible steps to advance its nuclear program. "A critical early priority has to be to deal with what is a escalating nuclear crisis as they move closer and closer to having enough material for a weapon," White House national security adviser Jake Sullivan said last week.

Washington-based sanctions experts point out that Iran's oil exports have rebounded last year as Tehran has found ways to bypass US sanctions through ship-to-ship transfers and use of front companies.

US court documents dealing with Iranian cargoes back that view, alleging that Tehran has managed to make use of facilities at Fujairah and other Mideast Gulf ports to export cargoes. China's imports of Iranian crude averaged 78,000 b/d in 2020, based on Beijing's customs data.

The cargo aboard the Achilleas was transferred from ship to ship three times since being loaded into the Iran-flagged Sarak and Sonia I at the Sirri Island oil terminal in Iran in May 2020, according to court documents. The cargoes were then transferred to the Cook Islands-flagged Lubov — also known as the Ethan — and then to Panamanian-flagged Trident Liberty, before being loaded into the Achilleas.

By Haik Gugarats