US Seizes Iranian Petrol Destined for Venezuela

The United States has seized the cargo on four tankers allegedly loaded with Iranian gasoline destined for Venezuela, the Wall Street Journal reported.

The US Justice Department issued a warrant last month to seize the cargo of the tankers Bella, Bering, Pandi and Luna, tying the shipments to Iran's Revolutionary Guards, which Washington has labelled a terror group.

The four ships were seized at sea and were now en route to Houston, Texas, the Journal reported Thursday, citing US officials.

The US court complaint says that Iranian businessman Mahmoud Madanipour, who allegedly had links to the Revolutionary Guards, arranged shipments for Venezuela using offshore front companies and ship-to-ship transfers to avoid sanctions on Iran.

Iran's ambassador to Venezuela said reports that Iranian tankers had been seized were "yet another lie and psychological warfare" by the United States.

"The ships are not Iranian, and neither the owner nor its flag has anything to do with Iran," Hojat Soltani said on Twitter in Spanish.

Venezuela is almost entirely dependent on its oil revenues but its production has fallen to roughly a quarter of its 2008 level and its economy has been devastated by six years of recession.

Washington's sanctions against President Nicolas Maduro's regime have forced Venezuela, which used to refine enough oil for its own needs, to turn to allies such as US nemesis Iran to alleviate a desperate gasoline shortage.

Iran sent several tankers of gasoline to Venezuela earlier this year to help ease shortages.

Photo: Fleetmon

First Iranian Oil Tanker Docks in Venezuela

By Margioni Bermudez

The first of five Iranian tankers carrying much-needed gasoline and oil derivatives docked in Venezuela on Monday, Caracas announced amid concern in Washington.

In a statement delivered on state television, Oil Minister Tareck El Aissami said the convoy was an expression of the Venezuelan people's "self-determination" and praised Tehran's friendship at a time of need. 

"What great fortune to have Iran in these times," said the minister, surrounded by members of the military leadership.

Earlier, El Aissami triumphantly shared images on Twitter of the first ship, "Fortune" arriving at El Palito refinery on Venezuela's northwest coast.

"We keep going and WINNING!" El Aissami wrote.

The United States has closely monitored the shipments, concerned that Iran and Venezuela—both under US sanctions—were taking their longstanding ties to another strategic level.

The Iranian tankers have run the gauntlet of US warships arrayed off the Venezuelan coast after Washington announced last month it was stepping up its naval presence, arguing there was an increase in organized crime. 

Tensions between Washington and Caracas remain high following Venezuela's disruption last month of an abortive military assault by a group of mercenaries coordinated by a private US security company.

The US has stepped up sanctions against socialist President Nicolas Maduro and his inner circle, recently offering a $15 million reward for Maduro accusing him of masterminding a drug-smuggling ring.

Washington and more than 50 other states accuse Maduro of stealing 2018 elections and instead recognize his opposition rival Juan Guaido as interim president.

Vital Shipment

The vital shipment arrives at a time of chronic fuel shortages in the crisis-wracked South American country, exacerbated by the coronavirus lockdown.

In Caracas, where drivers lined up for hours to fill their tanks, Tehran's helping hand was viewed with a mixture of hope and suspicion.

Osvaldo Rodriguez, 22, doubts the fuel "is for us," but instead destined for those with their hands on the levers of power in Venezuela.

"If gasoline is sold at the same price as abroad, nobody will be able to afford it," he said, alluding to Venezuela's minimum wage of $4.60 a month.

Gasoline is currently selling for up to three dollars a liter on the black market in Caracas, unheard of in a country where motorists are used to filling up for practically nothing.

“We have no shortage of oil! Supposedly we are sitting on five billion barrels of it underground. But there's no gasoline," said Teodoro Lamonte, 50, as he slowly rolled his car along a line outside a service station.

Venezuela boasts the largest proven oil reserves in the world, but production has plummeted under the current regime and its oil exports have been hampered by US sanctions.

The Fortune arrived in Venezuela's territorial waters on Saturday night, escorted by the Venezuelan navy.

The navy on Twitter said its ships were escorting a second tanker, the Forest, which it said entered the country's waters early Monday.

The other Iranian tankers—Petunia, Faxon, Clavel and Forest—will arrive in the next few days, state television said.

The fleet is carrying around 1.5 million barrels of gasoline, according to press reports. Tehran had warned of "consequences" if the US stopped the ships from reaching their destination.

Iran and Venezuela have had close relations since the late socialist leader Hugo Chavez took power in Caracas in 1999.

Venezuela has been in recession for six years, its economy in shambles and its citizens struggling with shortages of basic necessities such as food and medicines.

US sanctions have targeted Venezuelan oil exports, starving Caracas of vital income.

Venezuela is almost entirely dependent on its oil revenues but its production has fallen to roughly a quarter of its 2008 level.

Maduro's government blames that on US sanctions, including against state oil company PDVSA, but many analysts say the regime has failed to invest in or maintain infrastructure.

Falling oil prices since 2014 have exacerbated Venezuela's economic crisis.

Last month, the oil ministry revealed that the price of Venezuelan crude had fallen to its lowest level in more than two decades, at less than $10 a barrel. Last year it averaged $56.70.

Photo: SHANA

Pakistan PM in Tehran on Mission to 'Facilitate' Iran-Saudi Talks

Pakistan Prime Minister Imran Khan visited Iran on Sunday on a mission to act as a "facilitator" between Tehran and Riyadh and try to defuse rising tensions in the Persian Gulf.

Khan landed in Tehran around midday and met with President Hassan Rouhani at the presidential palace.

He was also scheduled to hold talks with Iran's supreme leader Ayatollah Ali Khamenei, before traveling to Riyadh on Tuesday.

"The reason for this trip is that we do not want a conflict between Saudi Arabia and Iran," Khan told reporters as he stood alongside Rouhani.

"Whatever it takes we must never allow this conflict to take place, because we know, Mr. President, that there is a vested interest that wants this to take place," he told Rouhani.

Noting that it was a "complex" issue that can be resolved through talks, Khan warned that any conflict between Iran and Saudi Arabia would "cause poverty in the world".

Pakistan has strong relations with Saudi Arabia, with more than 2.5 million of its nationals living and working in the kingdom, but it also maintains good relations with Iran and represents Tehran's consular interests in the United States.

This is Khan's second visit this year to Iran, which shares a border of about 1,000 kilometres (620 miles) with Pakistan.

Emphasising that the visits to Tehran and Riyadh were Pakistan's "initiative", Khan said he was also approached by US President Donald Trump to "facilitate some sort of dialogue between Iran and the United States".

Tehran and Washington have been at loggerheads since the US withdrew from the 2015 Iran nuclear deal in May last year and reimposed sanctions on the Islamic republic.

Rouhani repeated Iran's official line that the United States must return to the deal and lift sanctions before any talks can take place.

"Any goodwill gesture and good words will be reciprocated with a goodwill gesture and good words," he said.

Tanker Attacks

Rouhani said he had expressed Iran's concern about Gulf security and especially a "missile attack" Friday on an Iranian vessel off the Saudi coast.

"We expressed our concerns to the prime minister about the incidents happening to oil tankers, especially the Iranian oil tanker in the Red Sea on Friday," he said.

Tehran says the Iranian-flagged Sabiti tanker was hit by two separate explosions off the Saudi port of Jeddah, making it the first Iranian vessel targeted since a spate of attacks in the Gulf that Washington has blamed on Tehran.

Rouhani said he had presented Khan with evidence from the incident and that investigations were ongoing.

"If a country thinks that it can cause insecurity in the region and not receive a proper response, it is mistaken," Rouhani said, without elaborating.

There has been a series of still-unexplained attacks on shipping in and around the vital seaway involving Iran and Western powers, as well as drone attacks on Saudi oil installations.

Washington has accused Tehran of attacking the vessels with mines and of being behind the drone assault, something it strongly denies.

Khan met both Rouhani and Trump at the United Nations General Assembly last month, shortly after he visited Crown Prince Mohammed bin Salman in Saudi Arabia.

The Pakistan premier said he was "very encouraged" by talking to Rouhani and will go to Saudi Arabia "in a very positive frame of mind", hoping the two countries can "iron out their differences."

Photo: IRNA

Tanker Costs Surge as Chinese Firms Sanctioned Over Iranian Oil

By Alaric Nightingale and Firat Kayakiran

Oil-tanker costs are surging after the U.S. slapped sanctions on Chinese companies it accused of hauling Iranian crude, prompting a scramble in freight markets to secure alternative vessels.

Rates for ships hauling 2 million-barrel cargoes of Middle East oil to Asia jumped 15% or more, according to brokers. Shares of tanker operators also gained.

“There’s a lot of panic out there,” said Halvor Ellefsen, a tanker broker at Fearnleys in London. “Modern vessels are available, but just hard to get.”

The list of sanctioned Chinese companies includes a unit of COSCO Shipping Corp., which operates the world’s second-largest tanker fleet. The penalties bar U.S. citizens and companies from dealing with the sanctioned entities, effectively blocking them from American banks at the heart of the global financial system. As a consequence, oil traders spent the day canceling bookings and letting provisional charters lapse.

Tankers were being booked for about 75 Worldscale points for voyages to Asia, brokers said Thursday. A benchmark published by the Baltic Exchange in London was at 64 on Wednesday. Worldscale is an industry standard that allows traders to easily calculate costs and returns from thousands of different tanker routes. Shares of Frontline Ltd. advanced 8% in Oslo while Euronav NV gained 7.6% in Antwerp.

Rates were already rallying after attacks on Saudi oil installations earlier this month obliged traders to seek alternative cargoes, particularly from suppliers in the U.S. and elsewhere in the Atlantic Basin.

The sanctioned COSCO unit, COSCO Shipping Tanker (Dalian) Co., operates 26 supertankers capable of hauling a combined 52 million barrels of oil, according to data from Clarkson Research Services Ltd. Its parent company is not affected by the sanctions, the U.S. Treasury said.

China opposes the penalties against its companies and citizens and has consistently disagreed with the U.S. imposing unilateral sanctions, Geng Shuang, a foreign ministry spokesman, said at a media briefing.

“Western charterers may avoid all those COSCO VLCCs, but China Inc. is still the largest importer of crude oil, so domestically alone there could be usage of those vessels,” said Jon Chappell, an analyst at Evercore ISI in New York. “Longer term it’s hard to see how it has a sustainable impact unless the ships are banned from global trading.”

Photo: Wikicommons

Iran Sanctions Breach Suspicion Prompts Bank to Seize Ships

By Saket Sundria, Serene Cheong and Dan Murtaugh

Reports alleging that fuel tankers appeared to breach U.S. sanctions against Iran were cited in court filings by a bank as it sought to seize the ships, accusing the owners of loan default.

The accusations, which led to the the temporary arrest of the vessels in Singapore late last month, come as the U.S. seeks to isolate the regime in Tehran by cutting off oil sales, a major source of revenue. They also underscore how traders and shippers suspected of violating sanctions can run foul of their own lenders, not just governments.

Hanover-based Norddeutsche Landesbank-Girozentrale, known as NordLB, detailed its claim in documents filed last month in the High Court of Singapore seeking the arrest of the vessels, accusing their China-based owner of defaulting on a $30 million mortgage agreement.

The German lender said in the filings it was notified June 25 by the London P&I Club, a ship owners’ association that provides protection and indemnity insurance, that coverage on the ships would be terminated. That came one day before Lloyd’s List, an industry news publication, reported that two of the ships—Gas Infinity and Gas Dignity—appeared to have transported Iranian liquefied petroleum gas in breach of U.S. sanctions, the bank said.

Transponders Off

NordLB said it believes London P&I terminated coverage after being contacted by Lloyd’s to comment for the article. The London P&I club confirmed that it no longer insures Gas Infinity, but declined to comment further.

The tankers, along with Sea Dragon, were used as collateral for a $30 million loan NordLB made in July 2018 to Silvana Limited, Sea Dragon Group and Sea Dolphin Co., with China’s Kunlun Holding Co. and Kunlun Shipping as guarantors, according to the affidavit. The companies have offices in Shanghai and Hong Kong.

Gas Infinity and Gas Dignity turned off their transponders, which usually publicly broadcast their locations, when approaching the Strait of Hormuz and then turned them on again several days later when they were laden with fuel, the bank said in the affidavit, citing the Lloyd’s article. The bank also cited a Bloomberg article describing similar activity by another LPG tanker owned by Kunlun Trading Co., a shareholder of the borrower.

Sheriff’s Arrest

While the bank only cited media reports for its suspicions the ships broke sanctions, it described the actions, as well as losing satisfactory insurance coverage, as “events of default” on the mortgage.

Gas Infinity was placed under sheriff’s arrest in Singapore on July 22 and Sea Dragon on July 24, according to information from the Supreme Court of Singapore. Both ships have since been released. Gas Infinity is currently signaling China as its next destination while Sea Dragon is anchored off the south of India and indicating U.A.E.’s Khor Fakkan as its next destination, Bloomberg ship-tracking data show.

A woman who answered the phone at Kunlun Holding’s office Friday declined to comment and an email to Hong Kong-based Kunlun Shipping Co. went unanswered. Nobody responded to emails and phone calls to people associated with the Chinese companies whose contact information was included in court exhibits. NordLB declined to comment on the case.

In the court documents, NordLB said that the owners denied Gas Dignity had been in Iranian waters. But, it added, their response included location data missing days that corresponded to the time when Lloyd’s reported the transponder was turned off.

The bank also said that the copies of logbooks provided by the owners to show Gas Infinity was undergoing sea trials were mostly illegible and didn’t identify the name of the ship, according to the documents.

The two ships that were detained in Singapore under sheriff’s arrest, Gas Infinity and Sea Dragon, have both since sailed. Allen & Gledhill, representing NordLB, called for the release of the tankers in Singapore’s high court on July 29. The attorneys didn’t respond to an email seeking comment on the issue.

Photo: Fleetmon

UK Joins US in Persian Gulf Mission After Iran Taunts

By Joe Jackson and Amir Havasi

Britain said Monday it will join forces with the United States to protect merchant vessels in the Persian Gulf amid heightened tensions with Iran, after Tehran taunted Washington that its allies were too "ashamed" to join the mission.

Britain's decision to form the joint maritime taskforce with the United States marks a departure in policy under new Prime Minister Boris Johnson, after efforts under his predecessor Theresa May to form a European-led grouping.

It follows a spate of incidents -- including the seizure of ships -- between Iran and Western powers, in particular Britain and the US, centred on the vital Strait of Hormuz thoroughfare.

"The UK is determined to ensure her shipping is protected from unlawful threats, and for that reason we have today joined the new maritime security mission in the Gulf," Defence Secretary Ben Wallace said in a statement.

The announcement from Britain's defence ministry did not detail which, if any, other countries would be joining the new naval coalition.

Britain was also at pains to stress that it had not changed its broader policy towards Tehran.

"We remain committed to working with Iran and our international partners to de-escalate the situation and maintain the nuclear deal," Foreign Secretary Dominic Raab said.

The announcement came hours after Iranian Foreign Minister Mohammad Javad Zarif said Washington was increasingly isolated in its hardline stance against Tehran and its allies were too "ashamed" to join its forces in the Gulf.

He also dismissed US calls for talks as a sham, confirming he had turned down an offer to meet President Donald Trump last month despite the threat of US sanctions against him.

"Today the United States is alone in the world and cannot create a coalition," he said.

"Friendly countries are too ashamed of being in a coalition with them," Zarif told a news conference, saying they had "brought this situation upon themselves, with law-breaking, by creating tensions and crises."

Germany 'Not in Favor’

Tehran and Washington have been locked in a battle of nerves since last year when Trump withdrew the US from a landmark 2015 deal placing curbs on Iran's nuclear programme and began reimposing sanctions.

Tensions have spiked since the Trump administration began stepping up a campaign of "maximum pressure" against Iran.

Drones have been downed and tankers seized by Iranian authorities or mysteriously attacked in Gulf waters, while Britain has detained an Iranian tanker off Gibraltar.

At the height of the crisis, Trump called off air strikes against Iran at the last minute in June after the Islamic republic's forces shot down a US drone.

Iran said on Sunday its forces had seized a "foreign" tanker carrying smuggled fuel in what would be the third such seizure in less than a month in Persian Gulf waters—a conduit for much of the world's crude oil.

Last month the Guards said they had impounded the Panama-flagged MT Riah for alleged fuel smuggling as well as the British-flagged Stena Impero for breaking "international maritime rules".

In response to such incidents, the US has been seeking to form a coalition—dubbed Operation Sentinel—to guarantee freedom of navigation in the Persian Gulf.

Last month Britain, while still led by former prime minister May, proposed a European-led maritime protection force.

But both plans struggled to find partners, with European countries believed to be reluctant to be dragged into a conflict.

Germany said Monday it was currently "not in favour" of joining an American-led coalition.

'Left the Table'

Meanwhile the US continues to target Iran economically, while holding out the prospect of possible talks.

It imposed sanctions against Zarif on Wednesday—under the same sanctions already applied to supreme leader Ayatollah Ali Khamenei—targeting any assets he has in America and squeezing his ability to travel.

Meanwhile however the New Yorker magazine reported that Senator Rand Paul had met Zarif in the US on July 15 and had Trump's blessing when he invited the Iranian minister to go to the White House.

Zarif dismissed as disingenuous US "claims" it wants dialogue.

"They were the ones who left the table... Who do they want to negotiate with?" he said.

But Zarif did not rule out talks in the future, saying: "Even in times of war negotiations will exist."

Photo: CENTCOM

Iran Hints Open to Possible Tanker Swap, Nuclear Talks

President Hassan Rouhani hinted on Wednesday that Iran is open to a possible tanker swap with Britain and indirect talks with the United States over its nuclear program and sanctions.

"We don't want tensions with some European countries," Rouhani said in comments to a cabinet meeting posted on the official website of his government.

n a clear reference to the British, Rouhani said if they were to "cease the incorrect acts that they have done, including that of Gibraltar, Iran's response would be" appropriate to their actions.

Iran and the United Kingdom are in the midst of a tense standoff over British authorities' seizure of an Iranian tanker off Gibraltar in early July and Iran's detention of a UK-flagged ship in Gulf waters last week.

Rouhani also said Iran would be open to talks should there be a "ceasefire" in US economic sanctions against the Islamic republic.

Hostilities between Iran and the United States have risen since last year when President Donald Trump withdrew the US from the 2015 nuclear deal aimed at limiting Tehran's nuclear programme and began reimposing sanctions.

"In this regard some countries are intermediaries, though they themselves say they are not mediators and are just expressing their own views," said Rouhani.

"There has been correspondence from both sides on this issue and we are continuing this," he added.

Japanese Prime Minister Shinzo Abe visited Tehran in June for talks aimed at defusing tensions between Iran and the United States.

Earlier this month French President Emmanuel Macron sent his top diplomatic adviser, Emmanuel Bonne, to Iran "to piece together a deescalation" strategy.

Both Japan and France have denied acting as intermediaries between Iran and the United States.

Photo: IRNA

Attacks on Oil Tankers Near Hormuz Fan Fears of Conflict

By Verity Ratcliffe, Anthony DiPaola and Bruce Stanley

Two oil tankers were damaged on Thursday in a suspected attack near the entrance to the Persian Gulf, stoking fears that high-stakes diplomatic efforts won’t avert a military confrontation between the U.S. and Iran. Oil prices surged.

The incidents, including an attack on a Japanese-operated vessel, were the second in a month to hit ships near the Strait of Hormuz chokepoint, through which about 40% of the world’s seaborne oil travels. They come as Japanese Prime Minister Shinzo Abe, a rare ally of both Donald Trump and Iranian leaders, visits Tehran in an effort to ease tensions.

“Even in the absence of ironclad evidence, the U.S. and its allies will point the finger at Iran,” said Fawaz A. Gerges, professor of Middle Eastern politics at the London School of Economics. “These incidents are a bad omen because they point to a calculated escalation that tells us both sides are hunkering down.”

The prospects of a conflict have spiked since the Trump administration tightened its sanctions on Iranian oil exports in early May. Trump abandoned a year ago the 2015 deal that was meant to prevent Iran from developing a nuclear bomb and reimposed sanctions in a bid to force the Islamic Republic to rein in its military program and proxy militias.

Facing economic catastrophe, Iran has threatened to retreat from the accord itself unless European parties throw it an lifeline. Its supreme leader, Ali Khamenei, told Abe on Thursday that his country would not repeat the “bitter experience” of talks with the U.S.

High-Stakes Diplomacy

The Bahrain-based Fifth Fleet said it received two separate distress signals at 6:12 a.m. and about 7:00 a.m. local time. “U.S. Navy ships are in the area and are rendering assistance,” Commander Josh Frey, a spokesman, said. He couldn’t confirm reports that one of the vessels was struck by a torpedo. Iran said it has rescued 44 sailors.

The manager of one tanker, the Norwegian-owned Front Altair, said it was sailing in international waters when it was damaged by an explosion, whose cause “is as yet unknown.” The Norway Maritime Authority said there were three detonations on board. The ship had loaded a cargo of naphtha in Abu Dhabi and was bound for Taiwan, a company official said.

A distress call over VHF radio from the Front Altair said the ship was “under attack and on fire," said Donald MacLeod, a navigation officer on a vessel about 45 miles away on the Oman Sea. "They had to abandon ship."

Kokuka Sangyo, the Japanese operator of the other ship, said it was attacked twice, three hours apart, forcing the crew to evacuate. The tanker was carrying 25,000 tons of methanol from Saudi Arabia to Asia.

Brent oil crude soared as much as 4.5% and was trading at $62.07 a barrel at 10:42 a.m. in London. Stocks in Saudi Arabia and Dubai were down more than 1%.

The incidents come a day after Iran-backed rebels in Yemen fired a missile at a Saudi airport, wounding 26 people. The projectile crashed into the arrivals hall, damaging ceilings and windows and causing a fire, though the airport was able to keep functioning with only two flights cancelled. Houthi rebels last month hit oil infrastructure hundreds of kilometers inside Saudi Arabia, forcing it to temporarily close an oil pipeline.

Iran distanced itself from any attack.

“Iran is concerned by the suspicious events around commercial tankers related to Japan,” Foreign Ministry spokesman Abbas Mousavi, was quoted as saying on Fars news agency. “We see this as going against efforts from within the region and beyond to reduce tensions.”

Oil tankers last became a target in the Persian Gulf and Arabian Sea during the so-called "Tanker War" in the 1980s—a sideshow of the Iran-Iraq conflict. Between 1981 and 1988, a total of 451 ships suffered some sort of attack in the region from Iraqi or Iranian forces, according to a report from the U.S. Naval Institute.

Photo: ISNA

US Warns to Stay Away from Iranian Shipping

The United States on Wednesday warned all ports and insurance companies to steer clear of Iranian ships, which it called a "floating liability" after the imposition of sweeping US sanctions.

Since Monday, the United States has aimed to end all of Iran's sales of oil, its crucial export, in a bid to curtail the influence of the Shiite cleric-led state.

Brian Hook, the State Department's special representative on Iran policy, said that the US sanctions extended to insurers and underwriters.

“Knowingly providing these services to sanctioned Iranian shipping companies will result in the imposition of US sanctions," Hook told reporters.

"From the Suez Canal to the Strait of Malacca and all choke points in between, Iranian tankers are now a floating liability," he said.

He said that Iranian vessels would likely turn to domestic insurers but doubted that they could cover losses stretching into the millions or billions of dollars in a major calamity.

"Should there be an accident involving an Iranian tanker, there is simply no way these Iranian insurance companies can cover the loss," Hook said.

He said that the United States, whose military patrols the Gulf and is allied with Iran's rival Saudi Arabia, did not want incidents.

"We sincerely hope there will be no accidents, but accidents are a very real possibility, given Iran's record," Hook said.

President Donald Trump in May pulled out of an international agreement negotiated under his predecessor Barack Obama, in which Iran curtailed its nuclear program in return for sanctions relief.

The Trump administration said that the deal did not address other concerns, including Tehran's support for regional proxies such as Hezbollah, and has boasted of the economic contraction forecast in Iran due to the renewed sanctions.

The United States has nonetheless granted eight waivers to places including China, India and Japan, which will not immediately be punished for continuing to buy Iranian oil.

Photo Credit: IRISL

Iran's Options to Face Down US Oil Sanctions

Iran faces a potentially crushing loss of oil exports when US sanctions return in November, but the impact could be blunted by its experience of working around embargoes.

When Iran faced its toughest international sanctions between 2012 and 2015, analysts say it found a number of creative solutions, from repainting and renaming ships to switching off their tracking devices.

Those tactics have continued.

"We find those tankers quite often, leaving and entering Iran in a covert fashion with their transponder turned off," said Samir Madani, co-founder of TankerTrackers.com, which monitors the oil trade.

"We spot them through satellites. I'd say several vessels a month," he told AFP.

Analysts expect such behavior to ramp up when US sanctions on Iran's oil industry return on November 5, following Washington's withdrawal from the nuclear deal in May.

US pressure has already caused a 24 percent drop in Iran's sales between May and August, according to Bloomberg.

The big surprise has been cuts by Asian buyers, which analysts expected to resist US pressure, notably a 35 percent drop by China and 49 percent by India, according to the Eurasia Group consultancy.

"We underestimated the degree to which New Delhi and Beijing would concede to Washington's demands," it said in a briefing note.

Eurasia Group said wider geopolitics are at play: India is looking to deepen strategic ties with the US, while China may wish to avoid a fresh spat when it is already embroiled in a bitter trade dispute with Washington. 

Iran was exporting 2.7 million barrels of oil per day in May, but that has already fallen to 2.1 million.

Overall, Eurasia Group predicts the country's sales will fall by a further 0.9 million barrels per day to 1.2 million by November.

That would mean a loss of some USD 2-2.5 billion a month, at current prices.

'Cat and Mouse'

But analysts say Washington's goal of reducing Iran's oil sales to zero is unrealistic.

Iran has the world's fourth-largest reserves, and many countries—particularly in Asia—rely on its supplies and have refineries designed for its particular flavor of heavy crude.

And Tehran has many tried and tested ways to keep oil flowing.

It has already increased price discounts since May, worth around USD 10-15 million a month to large importers like China and India compared with last year, said Wood Mackenzie, a consultancy.

"Buyers can pay in kind, trade in other currencies, or extend credit—even keep the money in an escrow account in Switzerland and wait until these sanctions are over. India had a deal like that last time," said Madani.

If Iran can get its oil to a friendly port, it could be blended with oil from elsewhere and resold, said Thijs Van de Graaf, assistant professor for international politics at the University of Ghent.

"Iran played a cat and mouse game last time... and will probably do so again," he told AFP.

It also has more aggressive options, with President Hassan Rouhani recently restating an old threat to block the vital Strait of Hormuz through which around a third of the world's seaborne oil passes every day.

Rouhani announced last week that Iran was moving its main oil terminal out of the Gulf to a port in the Oman Sea, so that its tankers would no longer need to pass through the strait, giving it more scope to disrupt supplies.

Pressure on Europe

Iran says it will not accept major drops in its oil sales, putting pressure particularly on Europe, which was buying more than a fifth of its oil, to resist US demands.

The EU strongly opposed Washington's decision to scrap the nuclear deal and has vowed to introduce a package of measures to protect trade with Iran.

But European firms are highly vulnerable to US sanctions.

Shipping, banking and insurance firms have already backed out of Iran and oil purchases are down by 35 percent.

"If we cannot continue (the previous) level of sales even after the European package has been implemented, then that is a red line for us," warned deputy foreign minister Abbas Araghchi on state television.

Supreme leader Ayatollah Ali Khamenei warned recently that Iran would "set aside" the nuclear deal if it was no longer receiving the economic benefits it promised.

One slight upside for Iran is that oil prices are already rising due to the squeeze caused by the looming US sanctions.

Some analysts predict prices could exceed USD 100 per barrel, from the current level of around USD 70.

The United States has pressured its ally Saudi Arabia to pump more oil to compensate for the loss of Iranian supplies.

"In theory, it is perfectly possible to have an increased price of oil that entirely compensates for the loss of exports. That's why the US-Saudi relationship is key here," said Van der Graaf.

Photo Credit: IRNA

Iran Moving Main Oil Export Terminal Out of Persian Gulf

Iran is to move its main oil export terminal from the Persian Gulf to the Oman Sea, President Hassan Rouhani announced on Tuesday, sparing its tankers from using the strategic Strait of Hormuz.

Rouhani said exports were already being shifted from the Khark Island terminal, deep in the Persian Gulf, to Bandar-e-Jask in the Oman Sea and would be completed by the end of his term in 2021.

"This is very important for me, it is a very strategic issue for me. A major part of our oil sales must move from Khark to Jask," Rouhani said in a televised speech as he inaugurated three new petrochemical plants in the southern energy hub of Asaluyeh.

To reach the oil terminal on Kharg Island, tankers must currently pass through the narrow Strait of Hormuz, slowing down deliveries. 

Iran has in the past repeatedly threatened to block the Strait of Hormuz—which is used by its Gulf rivals including Saudi Arabia—when faced with sanctions on its oil exports and possible military action by the US.

The latest threat was in July when Rouhani said Iran has always guaranteed the security of the strait but warned the US "should not play with the lion's tale."  

Moving its terminal to the Oman Sea would in theory allow Iran to continue exporting oil even if the strait was closed.

The US pulled out of the 2015 nuclear deal in May and will reimpose sanctions on Iran's oil sector in November.

The last time there was a major disruption in the flow of oil through Hormuz was in 1984 during the Iran-Iraq war when both sides attacked each other's oil facilities and tankers. 

The strait is the world's most important oil chokepoint with roughly 35 percent of all seaborne oil passing through it, according to the US Energy Information Administration.

Bloomberg reported that Iran exported 2.1 million barrels per day (bpd) of oil in August, but analysts say US sanctions could reduce sales to around 1 million bpd.

Photo Credit: IRNA

Denmark's Maersk Tankers Ends Iran Shipping After US Reimpose Sanctions

Danish shipping group Maersk Tankers on Thursday said it would cease its activities in Iran due to the US's decision to leave a landmark nuclear deal and reimpose sanctions against Tehran. 

Maersk Tankers would honor customer agreements entered into before May 8, but then wind them down by November 4, "as required by the re-imposed US sanctions," the company told AFP. 

A former subsidiary of the Danish maritime group AP Moller-Maersk, Maersk Tankers was in October 2017 sold for $1.17 billion to APMH Invest, a subsidiary of the investment A.P. Moller Holding. 

The nuclear deal, reached in July 2015 between Iran and Germany, China, the US, France, Britain and Russia, called for Tehran to freeze its nuclear program in exchange for getting some international sanctions against the Islamic Republic lifted. 

Washington announced in early May that it would withdraw from the agreement and reimpose sanctions against Tehran. 

Iran's oil exports amounted to one million barrels a day, mostly to Asia and some European countries, before sanctions were lifted. They have since climbed to 2.5 million barrels.

Photo Credit: Maersk