By Al-Fassel | 2024-03-25

Iran's efforts to evade US oil sanctions have heightened environmental, safety and other risks in global waterways, a new report reveals.

US sanctions on Iran seek to eliminate its oil exports entirely.

Iran's illicit trafficking of oil funds the Islamic Revolutionary Guard Corps (IRGC) and its Quds Force -- the Islamic Republic's main mechanism for providing lethal support to terrorist organizations abroad, per the US Justice Department.

"While Iran's IRGC and its Quds Force are the regime's terrorist strongarms, oil is its lifeblood," Deputy Attorney General Lisa Monaco said February 2.

Her comments came as the Justice Department announced a raft of terrorism and sanctions-evasion charges and seizures linked to the illicit, billion-dollar global oil trafficking network that finances the IRGC and its malign activities.

Aging vessels, longer routes

Countries seeking to skirt sanctions have been using older tankers, according to a March 18 Congressional Research Service (CRS) report on the global oil tanker market as it relates to sanctions.

Sanctions evaders also take longer voyages to reach their destination, it said, noting that from 2002 to 2022, the average distance for one ton of seaborne oil increased from 3,993 nautical miles to 4,350 nautical miles.

This is expected to have increased to a record 4,578 nautical miles in 2023.

Tankers typically have an economic life of 20 to 25 years, the CRS report said.

"In recent years, between 25 and 140 tankers have been scrapped per year," it said. "However, reflecting the increase in demand for tankers as a result of sanctions, in 2023, a record low of seven product tankers were scrapped."

Shipowners have been scrapping fewer older tankers, it added, noting that "older tankers may be preferred for sanctioned oil traders because the longevity of the sanctioned market is uncertain."

Aging tankers have been sold at "elevated prices" and demand is high, it said, with prices for secondhand tankers rising 17% in 2023 -- the highest level in roughly 15 years.

"The result of these secondhand sales is that much of the sanctioned oil is moving in older tankers, which creates a safety risk," the report noted.

Of the 53 tankers in the National Iranian Tanker Company fleet in 2023, 23 were 20 or more years old, the report said.

Rewards for information

A typical tanker crew comprises 22 sailors, with crewing sometimes outsourced to "manning agents," the CRS report said.

Crew members are "likely to have knowledge about sanctions evasion tactics, such as ship-to-ship (STS) transfers or Automatic Identification System (AIS) spoofing," it said.

The United States has encouraged manning agents to ensure ship crews are informed of monetary awards available to them for confidentially reporting illicit activity, it noted.

A reward of up to $15 million is offered for information leading to the disruption of the financial mechanisms of the IRGC and its branches, including the Quds Force, by the US government's Rewards for Justice program.

For more information, or to submit a tip, mariners can visit the RFJ website: https://rewardsforjustice.net/english/irgc.html

Risks and repercussions

"Sanction evasion tactics could arguably increase the risk of an oil spill because they circumvent various practices that support safety," the report said.

"Turning off AIS transponders for long periods, conducting STS transfer operations without knowledge and approval of the coastal state, and use of older tankers that otherwise might be scrapped may raise safety concerns."

"Sanctioned oil carriers are also engaging with less reputable flag states and classification societies for their approval to operate," it added.

Some are circumventing traditional insurers and financing mechanisms that provide an independent check on ship seaworthiness.

"The establishment and use of nontraditional maritime service providers is essentially creating a second, parallel global shipping network," it noted. "It is uncertain what the long-term ramifications of this development might be."

Dealing in sanctioned oil can have serious repercussions.

The sanctions on Iranian oil, and on the oil of Venezuela and Russia, impose financial costs on entities or firms that support the shipping of sanctioned oil so as to discourage them from providing those services.

Foreign firms could have their US-based assets seized or be prohibited from dealing with US businesses or the US financial market, the CRS report said.

Being unable to serve the US market could harm maritime service providers because, other than China, the United States imports and exports far more cargo by sea than any other country, it said.

"In addition, the US dollar serves as the preferred currency for international transactions."