July 13 (Bloomberg) -- The Obama administration sanctioned the National Iranian Tanker Co. and four alleged front companies for Iran’s oil trade, the latest salvo in a U.S.-led campaign to curtail Iran’s petroleum sales until it abandons illicit aspects of its disputed nuclear program.
The U.S. Treasury Department announced yesterday it would freeze American assets belonging to the tanker operator, known as NITC, and block the company’s transactions from the U.S. financial system. The Treasury said Iran’s government controls the company, a former subsidiary of the state-owned National Iranian Oil Co. that was officially privatized 12 years ago.
The Treasury identified 27 entities affiliated with the tanker company and 58 vessels -- some of which have been reflagged in other countries to evade international sanctions on Iran’s petroleum sales.
The U.S. action doesn’t impose penalties on non-American companies that continue to do business with NITC. The move is intended to expose the tanker company’s links to the Iranian regime and discourage refiners, traders and shippers from dealing in Iranian oil that may be disguised as crude from another country, according to three officials in President Barack Obama’s administration who spoke on condition of anonymity because they were not authorized to be named.
“These identifications highlight Iran’s attempts to evade sanctions through the use of front companies, as well as its attempts to conceal its tanker fleet by repainting, reflagging, or disabling GPS devices,” the Treasury said in a statement.
Oil rose after the U.S. announced the sanctions aimed at the second-biggest crude producer in the Organization of Petroleum Exporting Countries. Crude oil for August delivery increased 27 cents to settle at $86.08 a barrel on the New York Mercantile Exchange. Prices have decreased 13 percent this year, even as the U.S. and European Union have imposed oil-related sanctions that went into effect recently.
The Treasury moves are part of a broader effort by the U.S. and EU to increase economic penalties on Iran to pressure its leaders to make concessions over its nuclear program. Iran’s main source of revenue is petroleum exports, accounting for more than half of gross domestic product, according to the International Monetary Fund.
The EU embargoed Iranian oil and banned EU companies from insuring Iranian crude shipments effective July 1. The Treasury’s list of NITC’s tankers will help European shippers and insurers comply with the EU ban, U.S. officials said.
In the past month, NITC changed the flags on 11 tankers to the Tanzania Zanzibar International Register of Shipping and 20 others to Tuvalu, according to the Equasis shipping database maintained by the European Commission. The ships were registered under new names and companies, while NITC remained the operator, data show.
Iran’s customers in Asia may be relying on NITC to deliver the country’s oil as EU sanctions block insurance for international tankers carrying the cargoes. India, the third-largest buyer of Iranian oil, asked the Persian Gulf country to arrange transportation and insurance for its shipments, and Iran offered to do the same for South Korea after the Asian nation said it would halt shipments because of Western sanctions.
NITC’s tankers are the only ones heading for Kharg Island, Iran’s largest export terminal; no other ships have signaled from the port since the EU embargo on Iranian oil took effect July 1, according to ship-tracking data compiled by Bloomberg. The EU ban affects insurers of 95 percent of the global fleet.
Representative Howard Berman, a California Democrat who in January proposed legislation to sanction NITC and the National Iranian Oil Co., said the Treasury’s move was “a step in the right direction, but we still have a long road ahead of us.”
Berman has written to the governments of Tanzania and Tuvalu to protest reflagging of NITC vessels with their nations’ flags. An Obama administration official and a foreign diplomat, who both spoke on condition of anonymity because of the sensitivity of the topic, said the U.S. and its allies are in talks with both governments on the issue.
The Treasury yesterday also identified what it called four “front companies” engaged in Iran’s oil trade that could be used to circumvent sanctions: Petro Suisse Intertrade Company SA (Petro Suisse), incorporated in Switzerland; Hong Kong Intertrade Company, based in Hong Kong; Noor Energy (Malaysia) Ltd, incorporated in Malaysia; and Petro Energy Intertrade Company, operating out of Dubai.
The Treasury Department said all four were fronts for the National Iranian Oil Co. or Naftiran Intertrade Company Ltd., known as NICO, and its affiliates.
Separately, the Treasury named individuals and entities allegedly involved in Iranian nuclear and missile proliferation activities, including an alleged Austrian native named Daniel Frosch who the U.S. said owns International General Resourcing FZE, based in the United Arab Emirates. The U.S. designated Good Luck Shipping of the U.A.E. for allegedly providing logistical services to Iran’s Ministry of Defense.
Treasury also updated its list of vessels belonging to the government-owned Islamic Republic of Iran Shipping Lines, known as IRISL, asserting that 57 IRISL ships had been reflagged or renamed since they were originally identified. With yesterday’s actions, the U.S. has identified 155 ships affiliated with IRISL whose assets are blocked and frozen in the U.S.
The Treasury also named 20 Iranian financial institutions that were blocked from the U.S. financial system under an Executive Order last February. While those banks have not been sanctioned by the U.S. for involvement in weapons proliferation or terror financing, U.S. officials said they were naming the banks to discourage all firms concerned with their reputation from doing business with Iran. U.S. companies and individuals are already prohibited from engaging in most transactions with Iran.
The U.S., Israel and European nations accuse Iran of hiding covert nuclear weapons activities; Iran insists its program is for civilian energy and medical research.
Iran is “under intense, multilateral sanctions pressure, and we will continue to ratchet up the pressure so long as Iran refuses to address the international community’s well-founded concerns about its nuclear program,” Treasury Under Secretary for Terrorism and Financial Intelligence David Cohen said in the statement yesterday.
The actions are “our next step on that path, taking direct aim at disrupting Iran’s nuclear and ballistic missile programs as well as its deceptive efforts to use front companies to sell and move its oil,” he said.
Mark Dubowitz, executive director of the Washington-based Foundation for Defense of Democracies, said Obama should support pending legislation that would blacklist Iran’s entire energy sector, barring international companies that do business in the U.S. from engaging in petroleum- or gas-trade or investments with Iran.
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