Four Iranian gasoline cargoes that were bound for Venezuela but seized by the US earlier this year have been sold in a forfeiture auction for more than $40 million, the US Department of Justice said Oct. 29
Elliott Abrams, the US State Department’s special representative for Iran and Venezuela, called the forfeiture case a “triple victory” for US national security interests. He said it deprived Iran of oil revenue, blocked badly needed fuel supplies to the Maduro regime in Venezuela, and will go into a fund for US victims of state-sponsored terrorism.
“With every shipment of oil or gasoline or petrochemicals that we can stop that someone doesn’t undertake because of US sanctions, [Iran loses] millions of dollars on each of those shipments,” Abrams told reporters during a briefing.
Abrams said he expects Iran to continue sending fuel to Venezuela, although the US seizure will force it to use its own National Iranian Tanker Co. vessels to avoid another seizure.
In August, DOJ executed a US district judge’s seizure order to confiscate 1.12 million barrels of Iranian gasoline bound for Venezuela on four private tankers: Bella, Bering, Pandi and Luna.
Use of civil forfeiture was seen as an escalation by the Trump administration to increase pressure on national security targets and crimp any source of oil revenue.
Abrams reiterated that he sees US sanctions pressure on Iranian and Venezuelan oil trading as a success even though flows continue between the countries, because it has pushed out all third-country shippers who now view the deals as too risky.
“It’s interesting because you don’t see Chinese ships doing it either,” he said. “You now see only Iranian tankers doing it, which reduces the amounts and the frequency because there are not unlimited fleets available for Iran to do that with.”
End to Venezuela exception
To increase pressure on Venezuela, Abrams confirmed that State has moved to block diesel-for-crude swaps that had been allowed until this month.
“We are trying to stop the export of crude by the Maduro regime in Venezuela, and one of the ways to stop it is to prevent people from swapping various products for it,” he said. “We have been in touch with those who are engaged in such transactions and have found that they are willing to comply with US sanctions.”
Suppliers of the diesel had urged the Trump administration to continue allowing the swaps, arguing they were crucial for humanitarian purposes like power generation and agriculture.
From January to August, Venezuela’s state-owned PDVSA received 1.6 million barrels of diesel imported in 11 shipments, including four from Italy’s Eni, five from Spain’s Repsol and two from India’s Reliance, according to a PDVSA tank movement report. Another 260,000 barrels of ULSD from Reliance was expected in September.
PDVSA paid the diesel suppliers in Venezuelan crude exports.
Fresh Iran sanctions
Separately Oct. 29, the US Treasury Department announced new sanctions on eight entities for their involvement in the sale and purchase of Iranian petrochemical products brokered by Triliance Petrochemical Co. Ltd., which was sanctioned in January. The entities are based in Iran, China and Singapore.
The action comes days after Treasury leveled sanctions across the entire Iranian oil sector, including the oil ministry, oil minister Bijan Zanganeh, the National Iranian Oil Co. and National Iranian Tanker Co.
Iran’s oil exports were already under intense US sanctions pressure, but the move by the Trump administration one week ahead of the US presidential election was seen as an attempt to harden the policy in the event that a potential Biden White House strikes a new nuclear deal with Tehran and lifts the oil sanctions.
Zanganeh dismissed the sanctions as meaningless, as he holds no assets outside Iran to be subject to sanctions.
“Imposition of sanctions on me and my colleagues is a passive reaction to the failure of Washington’s policy of reducing [Iran’s] crude oil exports to zero,” Zanganeh said. “The era of unilateralism is over in the world. Iran’s oil industry will not be hamstrung.”
Iran pumped 2 million b/d in September, according to the latest S&P Global Platts OPEC survey, down from 3.1 million b/d in September 2018, before the US reimposed oil sanctions on Tehran.
Iran sanctions relief under a change in US president represents the biggest supply and price impact for global oil markets heading into the US’ Nov. 3 election, with analysts expecting a Biden White House to quickly return to the negotiating table with Tehran.
S&P Global Platts Analytics predicts 1.5 million b/d of Iranian exports could return to the market within a year of a new deal that removes US oil sanctions.