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Weapons of Mass Destruction (WMD)

US 'Monitoring' as Iran Sends Fuel Tankers to Venezuela in Defiance of Sanctions

By Michael Lipin April 08, 2021

As Iran sent three gasoline shipments to fuel-starved Venezuela in recent months in defiance of U.S. sanctions, the Biden administration apparently did nothing to stop the tankers, signaling a reticence to enforce the sanctions and a savviness by the anti-U.S. allies in evading them.

Two National Iranian Tanker Company (NITC)-owned vessels, the Faxon and the Fortune, delivered several hundred thousand barrels of Iranian gasoline to the Venezuelan city of Puerto La Cruz at the end of January and beginning of February. The third NITC tanker, the Forest, delivered another 270,000 barrels of gasoline to the city of Puerto Cabello on February 20.

The deliveries were confirmed by a variety of nongovernmental sources, including TankerTrackers.com, an online service that tracks global energy shipments using satellite imagery and maritime data and London-based energy markets news service Argus Media, which said it obtained shipping data and documents related to the Iranian tankers.

Further confirmation came from the Reuters news agency, which cited several unnamed people with knowledge of the Iranian shipments.

Iran began sending irregular gasoline shipments to Venezuela, its longtime anti-U.S. ally, last May to help Caracas manage domestic fuel shortages stemming from dilapidated refineries and government mismanagement in the major oil-producing nation. In exchange for the deliveries, Caracas has provided Tehran with gold, surplus Venezuelan jet fuel and other commodities, according to U.S. and Venezuelan officials and reports by Argus Media and Reuters citing shipping documents and knowledgeable sources, respectively.

The administration of former president Donald Trump, which had sanctioned both Iran and Venezuela, responded to Iran's May and June gasoline shipments by seizing in August four tankers that U.S. officials said also were carrying Iranian gasoline to Venezuela, albeit under non-Iranian flags. But reports citing tanker-tracking services later showed that Iran managed to send three more gasoline shipments to Venezuela using NITC tankers in late September and early October, apparently without U.S. interference.

Asked by VOA Persian for its response to the three Iranian gasoline shipments to Venezuela in late January and early February, a U.S. State Department spokesperson said on March 24, "We are aware of reports of a Venezuelan-Iranian petroleum exchange and continue to monitor the situation."

The spokesperson made no reference to any U.S. sanctions enforcement action in relation to the illicit shipments and made no direct response to a question about whether the Biden administration will follow Trump's example by seizing future similar shipments.

The State Department spokesperson also referred questions about sanctions to the Treasury Department, which did not respond to a VOA Persian email requesting comment on the issue.

In an earlier March 8 phone briefing with reporters, a senior Biden administration official responded to a VOA question by acknowledging that Venezuelan authorities have adapted to unilateral U.S. sanctions on their energy sector by "sustain(ing) themselves through illicit flows."

The official expressed skepticism about the wisdom of maintaining those unilateral sanctions on Venezuela and said they are being reviewed to ensure that they punish President Nicolas Maduro's government, which the U.S. considers to be illegitimate, and not the Venezuelan people. There is "no rush" to lift the sanctions while the review is under way, the official added.

The Biden administration also has expressed a willingness to ease unilateral U.S. sanctions on Iran as part of a diplomatic process to revive a 2015 deal in which Tehran promised world powers to curtail nuclear activities that could be weaponized in return for global sanctions relief.

Trump withdrew from the deal in 2018, saying it was not tough enough on Iran, and started toughening U.S. sanctions to pressure Tehran to end objectionable behaviors. Iran retaliated a year later by starting an ongoing series of violations of the agreement's nuclear activity limits. The Biden administration has said it will keep Trump's sanctions in place until Tehran agrees to coordinate with Washington on a joint return to compliance with the nuclear agreement.

In addition to signaling a willingness to ease unilateral U.S. sanctions on Iran and Venezuela, the Biden administration has signaled a reluctance to aggressively enforce those sanctions in the case of the Iran-Venezuela fuel transfers.

Bogota-based analyst James Bosworth, whose company, Hxagon, provides political risk analysis on emerging markets, recently told VOA Persian that the Biden administration has shown that it wants to avoid escalating tensions with Iran and Venezuela. He noted that Iranian President Hassan Rouhani warned last May that if the U.S. interferes with Iranian tankers bringing gasoline to Venezuela, U.S. tankers will have a "reciprocal problem."

"Blocking tankers from reaching Venezuelan shores — that really escalates tensions beyond basic sanctions enforcement," Bosworth said. "You don't want enforcement to be this high stakes game that could lead you to military action."

Iran's success in shipping gasoline to Venezuela also can be attributed to its decades of experience in evading U.S. sanctions, said Emanuele Ottolenghi, an Iran analyst at the Foundation for Defense of Democracies, in a recent VOA Persian interview. Besides Iran having its tankers switch off their transponders for much of their journeys to and from Venezuela, it has developed new ways to disguise the shipments, he said.

"One of the recent techniques has been to disguise vessels as ships that are not owned by the Iranian fleet and do not have the Iranian flag. Part of the reason that further seizures of Iranian tankers have not happened since August is that it has taken some time for the U.S. government to figure out these techniques," Ottolenghi said.

The FDD analyst says one factor driving Iran and Venezuela to develop the new techniques for evading U.S. sanctions is the financial gain reaped by those involved in the illicit fuel shipments.

"The industry of sanctions evasion that facilitates these costly and circuitous deals makes a lot of money for the regime figures in Tehran and in Caracas who pull the strings, and it incentivizes them to continue creating ever more ingenious ways to break free of the sanctions," Ottolenghi said.

This article originated in VOA's Persian Service. Cristina Caicedo Smit and Rafael Salido of VOA's Latin America Division contributed to this report.

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