United States Seizes Iranian Petroleum Shipments, Bound for Venezuela, for Sanctions Evasion

On August 14, the U.S. Department of Justice announced “the successful disruption of a multimillion dollar fuel shipment by the Islamic Revolutionary Guard Corps (IRGC), a designated foreign terrorist organization, that was bound for Venezuela” aboard four foreign-flagged oil tankers.  These actions, according to the Department, “represent the government’s largest-ever seizure of fuel shipments from Iran.”

The genesis of these seizures was a civil forfeiture complaint that the Justice Department filed on July 2, 2020, in the U.S. District Court for the District of Columbia.  In essence, the complaint, which named the four oil tankers in question, stated, according to the Wall Street Journal, “that an Iranian businessman affiliated with the Islamic Revolutionary Guard Corps, Iran’s elite military unit designated by the U.S. as a terror group, arranged the fuel deliveries through a network of shell companies to avoid detection and evade U.S. sanctions.”

After the District Court issued the forfeiture order, unspecified U.S. forces reportedly “successfully executed the seizure order and confiscated the cargo from all four vessels, totaling approximately 1.116 million barrels of petroleum.” A senior U.S. official told the Associated Press

that no military force was used in the seizures and that the ships weren’t physically confiscated. Rather, U.S. officials threatened ship owners, insurers and captains with sanction to force them to hand over their cargo, which now becomes U.S. property, the official said.

The Justice Department credited unspecified “foreign partners” in assisting in the seizure and that the seized oil “is now in U.S. custody.”

The Department also reported that after the successful U.S. seizure, “Iran’s navy forcibly boarded an unrelated ship in an apparent attempt to recover the seized petroleum, but was unsuccessful.”  It provided a link to a short video from U.S. Central Command that it represented to be a video of the unsuccessful Iranian operation.

Note: This action by the Justice Department is noteworthy because it represents the first time that the United States has used vessel seizures to prevent Iranian oil shipments to Venezuela.  The Trump Administration undoubtedly regarded these seizures as a necessary response to the successful deliveries of gasoline to Venezuela by Iran earlier this year.  As the Journal noted, the seizure has particular force because it deprives two sanctioned regimes of much-needed resources: oil for Venezuela, and revenues for Iran.

Neither regime is likely to be deterred directly by the seizures, but the Administration undoubtedly expects that.  The key to the success of this stratagem by the United States will be whether the seizures “deter shipping companies from dealing with the Iranians and Venezuelans as tanker owners, brokers, insurers and other businesses see the risk as too costly.”  If the U.S. Government can dissuade legitimate shipping companies from future support, Iran and Venezuela will likely be forced to deal with far less reliable companies and less seaworthy vessels in continuing to evade sanctions.

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