The U.S. seized four tankers carrying Iranian gasoline bound for Venezuela in an unprecedented move by the Trump administration that carries the potential to destabilize global oil shipments if Iran retaliates.
The tankers were transporting 1.116 million barrels of petroleum, which has now been confiscated after help from “foreign partners,” the Justice Department said in a statement Friday. It is not clear where the ships were at the time of the seizures because they had all turned off their satellite-tracking systems to avoid detection between May and July, according to data compiled by Bloomberg.
“These actions represent the government’s largest-ever seizure of fuel shipments from Iran,” according to the DOJ statement, which said the Islamic Revolutionary Guard Corps, designated a foreign terrorist organization, was behind the shipment.
The prospect of retaliatory action by Iran has the potential to disrupt oil markets if Iran interferes with international oil tankers transiting the Strait of Hormuz, the world’s most critical choke point for oil shipments. However, the impact to oil prices may be limited from what it once might have been given lower fuel consumption in the face of pandemic-driven lockdowns.
“The seizure did not escalate militarily because there were no Iranian naval vessels escorting the tankers that had orders to engage,” said Scott Modell, managing director of Rapidan Energy Group. “But this is getting closer to the line. Tehran will show caution, for now, knowing that Iran’s collaboration with Venezuela was unlikely to ever go beyond a few small-scale transactions and public displays of anti-Trump solidarity.”
In Defiance
Iran was exporting gasoline to fuel-starved Venezuela in defiance of U.S. sanctions that are intended to choke off both nations from oil revenue. Presently, Venezuela is unable to produce gasoline because of widespread mechanical failures at its refineries and needed the shipments to alleviate fuel rationing. Five Iranian tankers arrived without incident in May and July, delivering about 1.5 million barrels of gasoline and stunning observers who wondered at the time if Iran would so blatantly defy U.S. sanctions efforts. (Read More)
