WASHINGTON — The United States is considering sanctions against a businessman in the United Arab Emirates and a network of companies suspected of assisting Iran’s oil exports, as part of a broader effort to increase diplomatic pressure on Tehran as US officials work to reach an agreement on Iran’s nuclear program.
According to corporate documents reviewed by The Wall Street Journal, shipping data, and people familiar with the matter, the firms and individuals under investigation have been using ship-to-ship transfers of oil in waters between Iraq and Iran, and then forging documents to conceal the origin of the cargo. Those involved can avoid Western sanctions against Iranian oil by passing off the blended oil as Iraqi.
However, there is no agreement within the administration on how to target suspected sanctions evasion operations. According to current and former officials familiar with the matter, the administration wants to renew a nuclear deal in order to rein in Iran’s nuclear plans, but it is also dealing with opposition to a deal as well as the economic impact of Russia’s war in Ukraine and sanctions.
Since the nuclear talks with Iran stalled this year, the administration has imposed two rounds of sanctions on companies it accuses of smuggling Iranian oil, an escalation meant to remind Iran of the consequences of failing to negotiate. Nonetheless, some current and former US officials claim that the Biden administration has kept a full-scale enforcement campaign at bay in order to achieve its goals.
“My expectation would be that we will continue to see a rollout of these sorts of enforcement actions on a fairly regular basis going forward,” a senior administration official said, referring to the nuclear agreement.
Questions were directed to the State Department by the National Security Council. “Any speculation that the administration is withholding sanctions on Iran to avoid supposed inflationary effects is equally false,” a State Department spokesman said.
Robert Greenway, who oversaw Iran policy during the Trump administration as senior director for Middle East policy at the National Security Council, said Iran’s sanctions-evasion operations through Iraq — including mixing Iranian and Iraqi oil to disguise its origin — could last up to 25 April % accounted for of Tehran’s exports when he was with the NSC in 2020.
“It was very important to Tehran, especially since Iran was under significant market pressure,” said Mr. Greenway, now a fellow at the Hudson Institute, a conservative Washington-based think tank.
Much of Iran’s blended oil, which included both crude and refined oil, was bought by customers in Asia, but Western companies such as Exxon Mobil Corp, Koch Industries Inc. and Shell PLC were also involved in the transactions, according to the documents. These Western companies either transacted for the companies involved in blending the oil, acted as outside shipbrokers, or bought the blended oil.
There are no allegations that Western companies intentionally violated sanctions. Exxon and Koch declined to comment. Curtis Smith, a Shell spokesman, said the company is reviewing past data to assess how this practice may have affected Shell cargo. In the meantime, he said, the company is committed to “fully complying with all applicable international laws, trade controls and sanctions.”
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According to people familiar with the matter, US officials believe the man behind the oil blender is Salim Ahmed Said, an Iraqi-born British national, and a number of companies who share email and company addresses with his firms, including Al -Iraqia Shipping Services & Oil Trading FZE, known as AISSOT.
In emails to the Journal, Mr Said denied owning AISSOT or violating US sanctions on Iran with any of the companies he owns or controls.
“I own Ikon Petroleum and Rhine Shipping. I am not the owner of Aissot,” he said. “My companies have never shipped any Iranian oil in violation of US sanctions, and all my dealings with Iraq have been perfectly legitimate.”
Western officials believe Mr Said’s alleged sanctions-circumvention operations came shortly after the Trump administration announced in mid-2017 that it was considering re-imposing sweeping sanctions on Iran in a bid to force Tehran into a new nuclear and security pact .
Around the time of this announcement, Iraq’s then-Oil Minister, Jabbar Ali Hussein Al Luaibi, was helping to set up a new company as the sole exporter of the country’s oil. The AISSOT company was a joint venture between the state-owned Iraqi Oil Tankers Company and the Arab Maritime Petroleum Transport Company, whose main owners include several Gulf countries, according to people and documents.
Mr. Luaibi said at the time that the joint venture would make Iraq a major international player in the energy shipping sector. Current and former US and Iraqi officials say the company was actually a vehicle to help Iran export oil.
“They export Iraqi energy products, but the real bread and butter of the business was five to 10 percent of Iran’s oil exports, fuel oil exports and other exports,” said a former Western official familiar with AISSOT’s operations.
A satellite scan of two tankers off the coast of the Iraqi port of Umm Qasr in March 2020.
Photo: Planet Labs PBC
AISSOT said in a 2020 statement that neither it nor its affiliates were involved in sanctioned activities, including trading in Iran’s energy exports, calling the allegations “baseless and false”. The company declined to comment on this article.
According to company documents, Mr. Said is not listed as an AISSOT official or owner. But numerous former executives said Mr Said controls the company.
Mr. Said “runs the whole show,” Muhanad Alwan said, adding that he was hired by Mr. Said to oversee AISSOT’s Iraq operations through mid-2020. Mr Alwan also said Mr Said told him that Iranians had an interest in AISSOT.
“Salim [Said] was the boss,” said another person with direct knowledge of AISSOT’s operations.
Mr. Said’s companies, including Ikon Petroleum, were prime contractors for the operation of AISSOT and have common addresses and senior management, according to the former employees and the company and property documents. In turn, AISSOT’s Iraqi oil shipments were used to secretly sell Iranian crude oil and fuel, the former employees said.
The Iranian Mission to the United Nations, the Iraqi Embassy in Washington, the Arab Maritime Petroleum Transport Company and Mr Luaibi, who were contacted through AISSOT and companies they own, did not respond to requests for comment.
AISSOT — and the other companies linked to Mr Said through shared email and company addresses — blended Iraqi and Iranian oil using ship-to-ship transfers in the waters that lie between the two countries, according to the people and documents. The tankers would stop transmitting their locations while sailing through the Persian Gulf and then declare the cargo as Iraqi with forged documents, according to the former employees, private shipping reports citing satellite data and official shipping register documents.
Mr. Alwan, the former head of AISSOT’s Iraq operations, said most of the mixed oil on the ship came from Iran and its origin was disguised with forged documents.
“Smugglers receive Iraqi or Omani documents for smuggled Iranian oil products,” Mr Alwan said.
One of the vessels believed to be involved was a tanker named Babel, which shipping data shows was operated by Rhine Shipping DMCC, a company owned by Mr Said, between 2017 and August 2020. According to people familiar with the matter, former employees and shipping data, AISSOT chartered the Babel for her operations during this period.
In March 2020, the Iranian tanker Polaris 1 loaded the Babel with 231,000 barrels of fuel oil worth about $9 million in a ship-to-ship transfer, according to company records and shipping data. Also in March, separate shipping data shows that the Babel was delivering fuel oil in Iraqi waters to the tanker Da Li Hu, owned by a then-sanctioned subsidiary of China’s state-owned shipping giant, during the same period.
AISSOT’s operations came under scrutiny after the Iraqi government’s Anti-Corruption Council launched an investigation in mid-2019, according to Iraqi government records reviewed by the Journal.
Then the Palau International Shipping Registry, where the Babel was registered in 2020, revoked the ship’s certificate in late October this year for allegedly turning off its transponder and loading petroleum products into Iran’s port of Bandar Abbas earlier in the month, the registry said .
Babel’s actions violated the “sanctions regulations of the European Union and the Office for Foreign Assets Control of the United States of America,” wrote Panos Kirnidis, the register’s managing director, to the shipowners.
In February 2020, the Iraqi government terminated the joint venture agreement with AISSOT, but shipping records show that the state-owned oil marketing company worked with AISSOT until at least 2021.