Iraq emerges as new front for enforcement of Iran oil sanctions
26 Oct 2020

Persian Gulf waters off Iraq have become a new, important waypoint for Iranian oil smugglers looking to avoid U.S. sanctions, according to American officials, who expressed frustration that Baghdad and other allies aren’t acting more aggressively to enforce curbs on commerce with Tehran.

Iranian tankers now regularly transfer crude to other ships just miles offshore the major Iraqi port of Al Faw, according to the officials. The oil is then mixed with cargoes from other places to disguise its origin, and it eventually ends up on sale in world markets, they say.

In one example from March, according to a shipping manifest reviewed by The Wall Street Journal, 230,000 barrels of oil from the state-run National Iranian Oil Co. were transferred to a vessel moored in Iraqi waters. The cargo was blended with Iraqi oil and passed to other ships, according to people familiar with the operation. The ultimate destination of the oil wasn’t clear.

The people familiar with the transfer said the operation was part of an increasingly common and lucrative business that involves transferring and mixing cargoes with other vessels multiple times and then selling the oil with documents that declare it is as Iraqi. Iraqi oil can be sold at a significant premium to oil of Iranian origin.

The owner of the vessel couldn’t be reached for comment. It wasn’t clear who was chartering the vessel at the time.

U.S. officials said satellite imagery shows that such maneuvers are increasingly common and undercut the Trump administration’s policy of “maximum pressure.” The policy seeks to compel Iran to negotiate new limits on its nuclear ambitions and regional influence.

The Iraqi government has repeatedly expressed its support for U.S. sanctions. It declined to comment for this article.

Iraq’s new prime minister, Mustafa al-Kadhimi, met with President Trump in Washington in August, in a visit that was touted by both sides as a new chapter in a relationship that had soured under former Premier Adel Abdul-Mahdi.

Iran has increasingly tried to find ways to get its crude to market despite the U.S. sanctions. Iran’s daily crude and condensates exports averaged 827,000 barrels a day in the first six months of this year, according to U.S. shipping-information company TankerTrackers.com. That is up 28% from the previous six months, but far below the level of 2.7 million barrels a day in May 2018 before the sanctions.

By Sarah McFarlane and Benoit Faucon, The Wall Street Journal, 23 October 2020

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