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Iran’s Ghost Tankers Are Slipping Through The Cracks

In anticipation of the U.S. sanctions against Iranian oil exports, which were reimposed by the Trump Administration on Monday (along with additional sanctions on everything from Iranian shipping to banking and insurance), oil tankers bearing the Iranian flag have embraced a stealthy approach to keeping the oil flowing: They're 'ghosting' international trackers by turning off their transponders, rendering the ships impossible to track by anything aside from visual cues.

Iran, which is already suffering from a drop in exports to 1.8 million barrels per day, down from 2.8 million barrels at the peak, is doing everything it can to keep the crude (along with 300,000 barrels of condensate) flowing. Though Iran received a temporary reprieve from the Trump Administration's sanctions waivers granted to eight of its biggest customers, those waivers are temporary, and they were also granted with the understanding that the applicants would gradually reduce their reliance on Iranian oil.

That means the kingdom is going to need to do everything it can to help any and all customers avoid detection, and possible US sanctions (which could include barring a given country's largest banks from accessing dollars and the global dollar-based financial system). Already, the ghosting method is proving surprisingly effective: In an interview with Sputnik, the founders of one of the most popular oil-tanker tracking services, tankertracker.com, have been "utterly exhausted" trying to track Iranian ships.

"It’s the first time I’ve seen a blanket black-out. It’s very unique," said TankerTrackers co-founder Samir Madani. Related: Oil Prices Slip On Crude, Gasoline Inventory Build

"Iran has around 30 vessels in the Gulf area, so the past 10 days have been very tricky, but it hasn’t slowed us down. We are keeping watch visually," said co-founder Lisa Ward.

Meanwhile, the "special purpose vehicle" - a kind of SWIFT alternative designed explicitly to help European companies avoid detection by the US - is helping to facilitate clandestine payments for Iranian crude, eliminating another methodology for tracking who, exactly, is buying Iranian crude. Iranian president Hassan Rouhani has said Iran will defy US sanctions, though both sides have insisted that they remain "open" to negotiations surrounding a new deal.

Iran has also employed another strategy from the pre-Iran deal era. The Republica is keeping six ships with a total capacity of 11 million barrels anchored offshore, allowing the "floating storage tankers" to make speedy deliveries to try and mitigate buyers' anxieties as, once they leave port, the ships will be essentially impossible to track.

By Zerohedge.com

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  • Mamdouh G Salameh on November 07 2018 said:
    Let me first correct two mistakes made by the author of this article. The first is that Iran’s oil exports never reached 2.8 million barrels a day as the author mentioned in his article. According to the 2018 OPEC Statistical Bulletin, Iran’s oil exports in 2017 averaged 2.125 mbd. The second mistake is that Iran is not a kingdom but an Islamic republic.

    The success of Iran’s oil tankers are proving very successful in evading international trackers by turning off their transponders, rendering the ships impossible to track by anything aside from visual cues. Such strategy will no doubt undermine US sanctions further.

    Three important things in particular will be undermining US sanctions in coming weeks. The first is that their whole sanction regime is at the mercy of China. China has the power to nullify US sanctions against Iran by buying the entire Iranian crude oil exports estimated at 2.2 mbd and paying for them in petro-yuan. China will do exactly that if there was no breakthrough ending the trade war between them during the forthcoming meeting in November between President Trump and Chinese President Xi Jingping.

    The second is that Russia’s oil minister said plainly that Russia will continue to buy Iranian crude and will also help Tehran sell it abroad. Russia buys Iranian crude under an oil-for-goods swap deal inked in 2014 and then resells it to other countries.

    The third thing is that the United States’ closest ally, the European Union (EU) is defying US sanctions and devising a mechanism for continuing trade with Iran and avoiding US sanctions.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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