Eyes on Iran as Britain seizes oil tanker over Syria sanctions

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Oil supertanker Grace 1 on suspicion of being carrying Iranian crude oil to Syria is seen near Gibraltar, Spain in this picture obtained from social media, July 4, 2019.

Stephen McHugh via REUTERS

LONDON (Reuters) - British Royal Marines seized an oil tanker in Gibraltar on Thursday accused of bringing oil to Syria in violation of EU sanctions, a dramatic step that could escalate confrontation between the West and Iran.

The Grace 1 tanker was impounded in the British territory at the mouth of the Mediterranean Sea after sailing around Africa from Middle East.


Shipping data reviewed by Reuters suggests it had been loaded with Iranian oil off the coast of Iran, although its documents say the oil is from neighboring Iraq.

The authorities in Gibraltar made no reference to the source of the oil when they seized it under the authority of European sanctions against Syria that have been in place for years.

But the likelihood that the cargo was Iranian drew a link between the incident and a new U.S. effort to halt all global sales of Iranian crude, which Tehran has described as an illegal "economic war" against it.

European countries have tried stay neutral in that confrontation, which saw the United States call off air strikes against Iran just minutes before impact last month, and Tehran amass stocks of enriched uranium banned under a 2015 nuclear deal.

In a statement, the Gibraltar government said it had reasonable grounds to believe that the Grace 1 was carrying its shipment of crude oil to the Baniyas refinery in Syria.

"That refinery is the property of an entity that is subject to European Union sanctions against Syria," Gibraltar Chief Minister Fabian Picardo said. "With my consent, our port and law enforcement agencies sought the assistance of the Royal Marines in carrying out this operation."

"SO PUBLIC, SO AGGRESSIVE"

A spokesman for British Prime Minister Theresa May welcomed Gibraltar's move, though the incident could also signal some tensions within Europe.

Spain, which challenges British ownership of Gibraltar, said the action was prompted by a U.S. request to Britain and appeared to have taken place in Spanish waters. Britain's Foreign Office did not respond to a request for comment.

While Europe has banned oil shipments to Syria since 2011, it had never seized a tanker at sea.

"This is the first time that the EU has done something so public and so aggressive. I imagine it was also coordinated in some manner with the U.S. given that NATO member forces have been involved," said Matthew Oresman, a partner with law firm Pillsbury Winthrop Shaw Pittman who advises firms on sanctions.

"This is likely to have been meant as a signal to Syria and Iran - as well as the U.S. - that Europe takes sanctions enforcement seriously and that the EU can also respond to Iranian brinkmanship related to ongoing nuclear negotiations."

Iran has long been supplying its allies in Syria with oil despite such sanctions. What is new now is U.S. sanctions on Iran itself. They were imposed last year when President Donald Trump pulled out of an agreement that guaranteed Tehran access to world trade in return for curbs on its nuclear program.

Those sanctions have been tightened sharply since May, effectively forcing Iran off of mainstream crude markets, making it desperate for alternative ways to sell oil and more reliant on its tanker fleet to store supplies it cannot sell.

The U.S.-Iranian confrontation has escalated in recent weeks, taking on a military dimension after Washington accused Tehran of attacking tankers in the Gulf and Iran shot down a U.S. drone. Trump ordered air strikes but called them off at the last minute, later saying too many people would have died.

European countries opposed Trump's decision to exit the nuclear deal last year, and they have promised to help Iran find alternative ways to export. But they have so far failed to offer ways to ease the impact of U.S. sanctions in practice.

Iran has said it wants to keep the nuclear deal alive but cannot do so indefinitely unless it receives promised economic benefits. This week it announced it had accumulated more low-enriched uranium than the deal allows, and it says it will refine uranium to a greater purity than permitted from July 7.

By restricting Iran's ability to move oil, U.S. sanctions have choked off Tehran's Syrian allies, causing fuel shortages in government-controlled areas. In May, Syria received its first foreign oil for six months with the arrival of two shipments, one from Iran, a source said at the time.

Earlier this year, Reuters revealed that the Grace 1 supertanker was one of four tankers involved in shipping Iranian fuel oil to Singapore and China, in violation of U.S. sanctions.

Ship mapping records from data firm Refinitiv show that in the latest case the Grace 1 sailed to the Mediterranean around the southern tip of Africa, instead of via Egypt's Suez Canal.

The 300,000-tonne, Panamanian-flagged tanker is registered as being managed by Singapore-based IShips Management Pte Ltd. Reuters was unable to establish contact with them for comment.

It was documented as loading fuel oil in the Iraqi port of Basra in December, though Basra did not list it as being in port and its tracking system was switched off. The tanker then reappeared on tracking maps near Iran's port of Bandar Assalyeh, fully loaded.

Homayoun Falakshahi, Senior Analyst at London-based energy data firm Kpler told Reuters the ship had loaded Iranian crude in mid-April from Iran's export port of Kharg Island.

A maritime intelligence source said the ship may have made the journey around Africa to avoid the Suez Canal, where such a large super-tanker would have had to unload its oil and refill after passing through, exposing its cargo to potential seizure.

(Reporting by Kate Holton and Jonathan Saul in London; Additional reporting by Tom Miles in Geneva, Tom Perry in Beirut and Roslan Khasawneh in Singapore; writing by Mark Heinrich and Peter Graff; editing by Jon Boyle)

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