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Iran is planning to increase its crude exports despite US sanctions on Tehran’s oil sales, according to the country’s oil minister Javad Owji. His comments come as Iran ships crude to Lebanon via Syria, defying the sanctions.

“There is strong will in Iran to increase oil exports despite the unjust and illegal US sanctions,” said Owji last week on state TV, as reported by Reuters. “I promise that good things will happen regarding Iran’s oil sales in the coming months.”

Tehran’s oil exports, its main source of revenue, have been crippled by the sanctions, which were reimposed in 2018 under the leadership of Donald Trump after Washington withdrew from the Joint Comprehensive Plan of Action (JCPOA).

The JCPOA was inked six years ago when Iranian officials agreed to dismantle the country’s nuclear programme. The deal was between Iran and China, France, Russia, the UK, the US, Germany and the EU.

The US’ secondary sanctions programme, which aims to restrict non-US companies from trading with Iran, has made legitimate trade with the Middle Eastern nation near impossible.

In June, the United Nations urged the Biden administration to “lift or waive” sanctions on Iran. Rosemary DiCarlo, the UN political affairs chief, said waivers related to oil trade should be extended to open a channel of dialogue with Iran.

The UN’s security council has stated it is deeply concerned about Iran’s accumulation of low‑enriched uranium, which are above the thresholds set out in the JCPOA.

Despite the sanctions still being in place, and with the US showing no indication that it will revive the JCPOA to get Iran back to the negotiating table, the country is finding new ways of exporting oil.

 

A covert operation

TankerTrackers, an online service that monitors ships, has been tracking vessels carrying crude from Iran to Lebanon via Syria. In its latest update on September 7, it names a vessel it has been tracking for the last week.

“Although the tanker carrying 33,000 metric tons of Iranian gas oil earmarked for Lebanon has not re-surfaced on the AIS [automatic identification system] network yet, we are publishing her name. As said, the vessel has been pretending that she is still in Iran, but isn’t. FAXON (9283758),” the company wrote on Twitter.

According to MarineTraffic, a service that allows the public to monitor ships, FAXON is anchored off the coast of Parak in Iran.

AIS was initially developed to help ships avoid collisions, and is now used to transmit signals from ships to satellites to show the location of vessels. AIS can be manipulated and is not always reliable; sometimes signals are not detected, and they can be switched off on purpose when those on board do not want their location known. When the whereabouts of ships are unknown, they are said to have gone ‘dark’.

Iran is also shifting three tankers of oil per month to Syria, where a network of vessels has been established in order to import crude, says TankerTrackers. “Syria does not have enough fuel to share with Lebanon because it needs to pay Iran for crude.”

Acting in defiance of sanctions could cause a headache for companies and banks that might inadvertently get mixed up in breaching the regime, as Iran takes a covert approach to shipping oil.

“Iran’s resolve to increase oil exports in spite of US sanctions makes the already complex regulatory landscape even more tedious for diligent companies to navigate,” Charles Ike, regional head EMEA of financial markets at Pole Star, a maritime technology company, tells GTR.

“We saw how unsuspecting corporates and their financing banks were inadvertently linked to illicit shipping activity due to their vessels being identified by OFAC for either delivering cargo to Syria, or performing STS [ship-to-ship] transfers with vessels destined for Syria, in OFAC’s March 2019 advisory.”

A ship-to-ship transfer operation is where cargo is loaded from one vessel to another at sea. Typically, STS transfers are legitimate and used to avoid vessels having to enter a port area.

In the advisory, the Office of Foreign Assets Control (OFAC) states “vessels carrying petroleum to Syria have been known to intentionally disable their AIS transponders to mask their movements”.

It adds this tactic can conceal the destination of cargo destined for Syria. It lists other methods, including falsifying cargo documents and vessel name changes, used to obfuscate the destination of petroleum shipments.

Ike concludes: “This time, there is a risk of something similar happening with Iran if vessel operators, commodity traders, and financing banks don’t perform comprehensive pre-engagement checks on vessels, especially before any STS transfers.”