Iran's ever more Creative Ways of Avoiding Western Sanctions

As time passes Iran is becoming increasingly creative in its methods of avoiding Western sanctions and this creativity has enabled it to keep its revenues from exported petroleum products at a reasonably high level.

When European oil and shipping insurance sanctions took effect in July Iran’s crude exports more than halved as customers began to cancel their contracts, however since then, thanks to the innovative methods of Gulf-based middlemen, sale have rebounded to decent levels.

Salar moradi, an oil analyst at FACTS Global Energy, said that, “the National Iranian Oil Company has been very successful in finding new strategies to circumvent sanctions and sold its fuel oil to Asia in August and September. Now we think Middle Eastern buyers of Iranian fuel oil have reappeared.”

A common method that Iran uses to dodge sanctions is to work in partner with Gulf-based oil traders who are working as middlemen for buyers who have no idea that the product is from Iran.

Related Article: How Bad do Sanctions Really Hurt Iran?

Using ship-to-ship transfers; loading and unloading at quiet, remote ports; and blending the Iranian fuel oil with other fuels, has become a popular tactic for disguising the source of origin.

Several Middle Eastern traders, have admitted that they have been approached by small UAE-based companies trying to sell them fuel oil that includes a mix of several different fuel oil blends from around the Middle East, or Iraq, and has been dubbed as ‘Iraqi Special Blend.’ The fuel oil cocktail is usually blended in storage tanks and then sold from the quiet Gulf port of Hamriyah, and the bunkering hub Fujairah, where it is then handed over to the buyer via a ship-to-ship transfer.

An anonymous Middle Eastern trader stated that, “this Iranian fuel oil, disguised as Iraqi origin, has been flooding the market in Fujairah and depressing both cargo and bunker premiums in September.”

Disguising the Iranian fuel oil as Iraqi has proven to be a good cover story due to the small volume of Iraqi oil that is actually smuggled over the border and out of Iranian ports anyway. A senior official at a Swiss trading house explained that, “some fuel oil does come out of Iraq overland smuggled in trucks. I imagine that some of the Iranian volumes may be piggy-backing on this trend.”

By. James Burgess of Oilprice.com