Iran sidesteps U.S. sanctions, allowing it to fund proxy groups like the Houthis

In the lawless and violent chaos of the seas off the Arabian Peninsula, Iran is allowed to skirt U.S. sanctions, maintain oil revenue and therefore fund proxies like the Houthis.  
 
Thursday’s seizure of the oil tanker St. Nikolas is a rare example of the Iranian military getting directly involved. It’s also seen as retaliation for the U.S. seizing the very same ship a few months ago.    

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The tanker was formerly named the Suez Rajan. In April, the U.S. took control of it and ultimately offloaded one million barrels of Iranian crude oil. It is one of hundreds of tankers experts say are undermining U.S. sanctions and smuggling Iranian oil.  

Lloyd’s List Intelligence calls the ships the “dark fleet.”  A group of U.S. congressional representatives used the term “ghost armada.”  The fleet is anywhere from 300 to 560 ships.  The common traits are anonymous ownership, or at least ownership that is hard to track.  The ships are usually older than tankers involved in legitimate trade. They turn off their electronic location equipment or deliberately obfuscate their location, especially when loading or offloading sanctioned oil. Most importantly, they engage in a practice called “flag hopping,” shopping around for a poor nation that will let them register and fly its flag for a fee.  
 
“It’s these vessels that are operating and trading outside Western jurisdiction and primarily shipping sanctioned oil,” says Michelle Wiese Bockmann, Principal Analyst with Lloyd’s List Intelligence.  She says the countries that sell the use of flags include Cameroon, Gabon and the Cook Islands. But according to Bockmann, around half of the flags in the “ghost armada” are from Panama.    
 
“Panama doesn’t have the resources to manage every single one of the thousands of vessels it flags,” says Bockmann.  

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A group of U.S. Congressmen (14 republicans, 1 Democrat) sent a letter to U.S. Secretary of State Antony Blinken demanding he pressure Panama to “de-flag all the vessels actively evading US Sanctions by transporting Iranian oil.”    

A Houthi fighter stands on the Galaxy Leader cargo ship in the Red Sea in this photo released November 20, 2023. (Houthi Military Media/Handout via REUTERS  / Reuters Photos)

 
“We’re asking the administration to enforce the sanctions that are there and put the squeeze on those who are doing business with Iran,” said Rep. Bill Huizenga, a Republican from Michigan.  
 
The smuggling has been effective. In 2019, Iran was exporting somewhere around 400,000 to 600,000 barrels of oil per day.  Former U.S. Ambassador to the UN and current CEO of United Against Nuclear Iran Mark Wallace says Iran is now exporting about 2.4 million barrels of oil per day. Most of it is sold to China.  

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“I think the United States has fully lost the plot on deterrence,” says Wallace. “We are mandated by law to enforce sanctions on Iranian smuggling. Right now, as we speak, there are 300 vessels traversing the seas smuggling Iranian oil. Those vessels are operating with impunity.”  

Oil prices fell at the start of Asian trade on Sunday, after the United Arab Emirates and the Iran-aligned Houthi group welcomed a truce that would halt military operations on the Saudi-Yemeni border, alleviating some concerns about potential supply (Reuters / Reuters Photos)

 
However, A U.S. State Department spokesperson tells Fox News that since Iran is forced into the black market and having to spend resources to evade sanctions, “We assess that the regime receives only a fraction of the market price for the oil it is able to sell.”