March 26, 2021
The US policy of seizing Iranian oil shipments on the high seas suffered a setback in March when a UAE national went to court in the US saying the last cargo the US seized was his and not Iran’s.
A company controlled by the Emirate of Fujairah’s ruler told a US court that the roughly 2 million barrels of crude was originally from Iraq, not Iran. Fujairah International Oil & Gas Corp. (FIOGC), wholly owned by Shaikh Hamad bin Mohammed Ash-Sharqi, said it’s an intermediary seller of the oil, according to a claim filed in a federal court in the District of Columbia.
FIOGC said that in June it bought the crude from an undisclosed Iraqi supplier, which presented bills of lading from Iraq’s state oil marketer, SOMO, as proof of origin. FIOGC then stored the oil on a ship at the port of Fujairah, on the UAE’s Gulf of Oman coast outside the Persian Gulf.
In October, FIOGC sold the oil to an unidentified Chinese buyer. Under the agreement, FIOGC was responsible for delivering the crude and chartered the supertanker Achilleas for the journey to China.
The US government moved to seize that cargo late last year after the Achilleas’ Greek owner, Capital Ship Management Corp., alerted US authorities to the possibility it had unknowingly taken on Iranian crude, after believing it came from Iraq.
The Achilleas rerouted to the US and the crude was discharged in Houston in March. FIOGC says it retains a financial stake in the cargo.
The US Department of Justice filed a legal case in early February to allow it to seize the oil. Shaikh Hamad is now fighting that effort. The United States will have to prove that the oil in question is Iranian and not Iraqi. Back in the 1980s, the US developed a system of chemical analysis to identify the origin of crude oil. It developed that because Iran was trying to sell crude in the United States masquerading as originating in other countries.
Shaikh Hamad is a member of the UAE’s Supreme Council, the country’s executive arm. The UAE is one of the US’s closest allies in the region. It’s a federation of seven emirates including Fujairah, though Abu Dhabi is the capital and holds the most sway politically.
