US expected to begin unloading oil from seized Iranian tanker

The US is expected to soon begin unloading oil from an Iranian vessel it seized which is now anchored off the coast of Texas, threatening to escalate a shadow tanker war with Tehran.

The Suez Rajan arrived offshore of Galveston on May 29 and is at anchor some 70 miles from the Texas port, according to transponder location data and satellite imagery.

The US Department of Justice seized the Suez Rajan under a court order with co-operation from at least one company involved with the vessel, the FT previously reported. The ship has been the subject of scrutiny since last year following claims it took on board a cargo of Iranian oil, then intended for China, from another ship near Singapore.

The case of the Suez Rajan is one of several recent maritime incidents involving the US and Iran and threatens to increase tensions between the countries as Washington and its European allies have renewed discussions on how to engage Iran on its nuclear activity.

The US seized the ship in April, prompting Iran to seize the Advantage Sweet, which was carrying Kuwaiti crude oil for US energy company Chevron.

The Biden administration recently increased patrols to respond to Iran’s ship seizures in the Strait of Hormuz, where about a third of all seaborne oil cargoes pass through each day.

The Suez Rajan’s arrival off the coast of Galveston probably indicates that the US government has reached a deal with the owners and operators of the vessel over criminal penalties, said a former official in the Joe Biden administration.

The vessel is carrying about 800,000 barrels of oil, a cargo worth about $56mn.

The ship received a licence from the US Treasury department to import Iranian oil, according to the American Bureau of Shipping, which boarded the vessel to conduct a safety inspection upon its arrival off Texas. The ship is expected to come into the Galveston port in the coming days. Typically, court documents related to a government’s seizure tend to be unsealed after the assets are taken.

The US will sell the oil if it has not already and the proceeds are likely to go to a fund created by Congress for US victims of state-sponsored terrorism, former US officials said.

However, the government has leeway over what it can do with the funds from the sale and could choose to distribute them in other ways, such as for those who are standing up to the Iranian regime, the former Biden administration official said.

The DoJ declined to comment. Treasury’s Office of Foreign Assets Control declined to comment.

Iran was once a major source of imported oil for the US, but this changed after the Iranian Revolution in 1979 and the steady deterioration of relations in the decades after.

US imports of sanctioned Iranian oil since then have been extremely rare — the US imported 2mn barrels in 2021, which it sold after seizing an oil tanker off the coast of the UAE and 507,000 barrels in 2022, believed to be connected to the seizure of two tankers with Iranian oil.