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Two Iran-flagged vessels have been sitting idle at Brazilian ports for weeks because they need fuel to return to Iran, but Brazil’s Petrobras refuses to sell them fuel because of the U.S. sanctions on Iran that could also affect the Brazilian state energy firm listed in New York.
Iranian ships Bavand and Termeh traveled to Brazil earlier this year loaded with urea, a petrochemical product which is used as a fertilizer. After offloading the urea, the ships were planned to load corn from Brazil and return to Iran, officials at the Brazilian port operator at the Paranaguá told Reuters.
But the vessels don’t have enough fuel for the voyage back to Iran. The owner of the two ships, Iran’s state company, Sapid Shipping Co, has been trying, unsuccessfully, at local Brazilian courts to force bunker fuel supplier, Transpetro—a unit of Petrobras—to sell it fuel for the return trip, a source familiar with the issue told Reuters on condition of anonymity.
Petrobras, for its part, fears that it could become a target of secondary U.S. sanctions if it or any of its subsidiaries were to deal with Iran-flagged ships. Petrobras is exposed to the U.S. financial system and markets because its shares are listed not only in Brazil, but also on the New York Stock Exchange.
“The vessels were included by the United States in the Specially Designated Nationals and Blocked Persons List (SDN),” Petrobras said in a statement, as carried by Reuters.
Because it is listed on the NYSE and operates in the U.S., Petrobras could be subject to penalties or sanctions if it sold fuel to the Iranian ships, the Brazilian state-held energy firm added.
The Iranian ships are stuck at Brazilian ports since no one is able to intermediate the sale of bunker fuel for them, a fertilizer trader with knowledge of the matter told Reuters.
The last-resort solution would be Iran sending a ship with fuel from Iran to refuel the ships carrying corn, highlighting the extent to which the U.S. sanctions hit the Islamic Republic’s trade and economy.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.