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US seizes cargo of two tankers suspected of transporting Iranian oil

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MIAMI: The US has quietly seized the cargo of two tankers suspected of transporting Iranian oil as part of an elaborate sanctions-busting scheme involving forged documents and the repainting of a ship’s deck to cloak illegal shipments.

The seizure comes as the Biden administration seeks to revive a 2015 nuclear deal with Iran that would likely entail the US lifting punishing sanctions. 

Details of the seizure, which has not been previously reported, were contained in a federal civil case unsealed last month after the Greek-managed vessels discharged their valuable cargo, worth upward of $38 million, in Houston and the Bahamas at the direction of US law enforcement.

That task has been made more urgent by Vladimir Putin’s attack on Ukraine and the US decision to retaliate by banning all Russian oil imports, which potentially removes from Western markets more than 10 million barrels per day of oil. 

Some of that lost supply could be made up by Iran, which pumped an average of 2.4 million barrels per day in 2021 though due to sanctions has been able to sell less than half of what it produces.

Opponents of Iran warn that even as Ukraine scrambles geopolitical calculations and the US turns its attention to Russia, the Biden administration shouldn’t take pressure off Tehran. 

The long odyssey that led to the US seizure began in the fall of 2020 when the M/T Stark I, an Iranian-owned vessel under US sanctions since 2018, repainted its deck in an apparent attempt to disguise the vessel and avoid detection by satellite imagery. On October 31, 2020, it pulled into a terminal at Iran’s Kharg Island and loaded full of oil.

Four days later, on November 3, 2020, 733,876 barrels of oil were transferred at sea to another tanker, the M/T Arina. During the dangerous ship-to-ship transfer, both ships turned off their transponders — a mandatory safety device on all large ships — to avoid being picked up on ship tracking databases, satellite imagery, and data shared by Jungman show.

Despite US sanctions, Iran has seen a windfall of revenue as oil prices have risen over the past year. Key to the smuggling operation are dozens of privately owned, foreign-flagged tankers — dubbed a “ghost armada” by Jungman’s group that deploy a variety of sophisticated techniques to hide their movements. 

Even US-owned tankers, such as one belonging to a subsidiary of private equity giant Oaktree Capital Management, have been implicated in the brisk, black market trade.

In a cat and mouse world, ship tracking technology has given a boost to efforts to detect sanctions-evading behavior by Iran as well as Venezuela, whose oil industry is also under US export restrictions. 

But seizing oil shipments is rare: prior to this latest action it had been done only twice before. Proceeds from the sale of forfeited cargoes partly go to compensate American victims of terrorism.

Iran’s 2015 nuclear deal with world powers saw it regain the ability to sell oil openly on the international market. But in 2018, then-president Donald Trump unilaterally withdrew from the accord and re-imposed American sanctions. That slammed the door on much of Iran’s lucrative oil trade, a major engine for its economy and its government.

But in recent months, Iranian officials have been suggesting they’ve been able to sell crude oil anyway around American sanctions. 

The Central Bank of Iran issued statistics at the start of February suggesting it made $18.6 billion in oil sales in the first half of this Persian year, as opposed to $8.5 billion the same period last year, according to the state-run newspaper.

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