A shipping insurer has warned its member this week that that Iranian crude labelled as Iraqi oil was being transferred ship to ship by smugglers at oil cargoes at a port in the United Arab Emirates.
Insurer West of England has said the cargos may contain Iranian crude disguised as Iraqi barrels, and that it cannot insure these volumes as they are in breach of U.S. sanctions on Tehran.
The ship to ship (STS) transfer by smugglers has been taking place at the Khor Fakkan port in the United Arab Emirates (UAE).
The insurer said in a statement published on its website on Jan. 13: "It appears that such oil may routinely be described as being of Iraqi origin and as having been loaded on board the transferring vessel at Basra some time before the proposed STS operation."
The insurer said it "cannot provide insurance to vessels which load Iranian cargo in such circumstances and cover will cease in its entirety if such cargo is loaded".
The insurer company said that documentation of barrels labelled as originating from Basra in Iraq, and which stopped over at Khor Fakkan, should not be taken at face value.
“There is evidence of a sophisticated smuggling operation and those responsible may go to considerable lengths to disguise the true origin of the cargo. Cargo documentation is likely to appear credible and there may be no evidence of any designated parties being involved. “
“Members are therefore advised to exercise extreme caution when engaging in STS operations in the Arabian Gulf. In particular it is recommended that Members check with port agents to ensure that vessels providing cargo by means of an STS transfer in the region loaded the cargo at the port stated in the cargo documentation before any cargo is received. “
The insurer said that Iranian vessels loaded with crude had shuttled across the Strait of Hormuz to supply ships with oil labelled as originating from Iraq and destined for countries that do not benefit from a waiver of U.S. sanctions legislation.
The insurer warned its members that transport of Iranian oil without a waiver under U.S. law "may trigger enforcement action against the vessel, its owners and related parties by the U.S. authorities".