US failing to sell seized Iranian oil sitting in Gulf of Mexico - report

The US has failed for weeks to sell 800,000 barrels of seized Iranian oil sitting in a tanker in the Gulf of Mexico due to companies' concerns of Iranian reprisal, The Wall Street Journal reported on Wednesday.

In February 2022, the United Against Nuclear Iran group reported that it had identified the Suez Rajan tanker, which was operated by the Greece-based company Empire Navigation, conducting a ship-to-ship transfer of Iranian oil with the tanker Virgo off the shore of Singapore. The oil was reportedly intended for China.

The UK-based firm Fleetscape, which provided lease financing to Empire Navigation, and Empire Navigation said at the time that they were "cooperating fully" with US authorities on the matter.

The Suez Rajan tanker was seized in April this year by the US Department of Justice, with the Financial Times reporting that at least one company involved with the vessel was cooperating with US authorities. A few days later, Iran seized the Marshall Islands-flagged Advantage Sweet oil tanker which had been chartered by oil major Chevron.

The Suez Rajan tanker eventually made its way to the Gulf of Mexico, where it has remained since.

The Financial Times reported in early June that the US was expected to begin unloading the oil on the vessel soon, with the proceeds likely to go to the US Victims of State Sponsored Terrorism Fund, which provides compensation to victims of terrorist attacks.

US firms scared to unload Iranian oil

Despite the report, S&P Global reported in mid-June that Houston Refining, the company that owns the ship's cargo, had been searching without luck for two weeks to find a crude tanker to unload the Iranian oil from the Suez Rajan.

"Despite this being taken in by the DOJ and having all the OFAC waivers, the stigma of having touched a sanctioned entity's crude will be carried forever in the eyes of the rest of the world," a shipowner told S&P Global.

Over four weeks later, the oil remains on the Suez Rajan, according to The Wall Street Journal.

“Companies with any exposure whatsoever in the Persian Gulf are literally afraid to do it,” said a Houston-based energy executive involved in the matter to The Wall Street Journal. The executive cited concerns “that the Iranians would take retribution against them.”

A number of companies have declined to unload the oil, according to the report. "I don’t know if anybody’s going to touch it," said another executive at a shipping company involved in unloading oil from tankers in the Gulf of Mexico.

“The US cannot enforce oil smuggling sanctions if the shipping and related industry businesses live in fear of Iranian retaliation,” said Mark Wallace, United Against Nuclear Iran’s chief executive, to The Wall Street Journal. “Without real American deterrence, Iran can act with impunity to defeat even the best-crafted sanctions laws.”