U.S. Markets closed

U.S. Unveils Warrant to Seize Iranian Ship Stuck at Gibraltar

Jonathan Browning, Alex Longley and Nick Wadhams
U.S. Unveils Warrant to Seize Iranian Ship Stuck at Gibraltar

(Bloomberg) -- The U.S. government has issued a warrant to seize the supertanker Grace 1, which was detained last month on suspicion of hauling Iranian oil to Syria in violation of European sanctions.

A complaint unsealed in Washington states that “‘Oil Tanker Grace 1,’ all petroleum aboard it and $995,000 are subject to forfeiture,” according to a Justice Department statement. The statement alleges a “scheme to unlawfully access the U.S. financial system to support illicit shipments” of oil from Iran to Syria in violation of U.S. sanctions, money laundering and terrorism statutes.

The vessel, which is currently anchored off the coast of Gibraltar, is at the center of a diplomatic spat between the U.K. and the Trump administration. The U.S. has threatened to impose sanctions on anyone dealing with the ship and expressed disappointment with Britain after a court in Gibraltar ruled the ship was free to sail. Ports, banks and anyone else who does business with the ship or its crew might be subject to penalties, two U.S. administration officials said. Iran’s foreign minister said on Twitter that the ship’s detention was unlawful.

While the cargo was originally bound for Syria, Iran has provided assurance that this is no longer the case, the Gibraltar government said in a statement Friday.

“The evidence is clear and the facts speak louder than the self-serving political statements we are hearing today,” according to the statement, which didn’t specify the comments it was referring to.

Missed Opportunity

The court’s decision Thursday to release the Grace 1 was a missed opportunity and the Trump administration hopes that the U.K. government and authorities in Gibraltar will reconsider, according to the U.S. officials, who asked not to be identified discussing private deliberations. They said the court order rewards Iranian terrorism and Tehran will interpret the action as appeasement.

It’s not clear when the Grace 1 will set sail. It is currently anchored off the coast of Gibraltar, where it has been since British forces seized it last month on suspicion of violating trade sanctions. At the time, the U.S. Department of Justice hadn’t filed the appropriate action to block the vessel’s release, the Gibraltar Supreme Court said Thursday.

The American officials said the U.K. should think of the tanker issue in terms of the broader relationship with the U.S., particularly as U.K. Prime Minister Boris Johnson’s government presses forward with departing the European Union and seeks a free-trade agreement with the U.S. While the people wouldn’t say the release threatens prospects for that deal, they added that the U.K. should ask if it wants to do business with the U.S. or Iran.

Gibraltar’s decision to release the ship essentially sets up a race between Iran and the U.S. over its fate. Iran’s Mehr News agency said Thursday the vessel was bound for a port in the Mediterranean, citing Jalil Eslami, deputy for maritime affairs of the Iranian ports and maritime organization. However, it hadn’t moved as of 8:47 a.m London time on Saturday, according to tanker-tracking data compiled by Bloomberg.

Gibraltar’s chief minister said the case may yet return to a court in the territory if proceedings are brought forward by the U.S.

Diplomatic Row

The seizure of the tanker has heightened tension between Iran and the West, in a relation already under strain since the U.S. reimposed sanctions last year. A series of vessel attacks and seizures have threatened shipping in the Strait of Hormuz, the world’s most critical chokepoint for oil shipments.

Following the Grace 1’s detention on July 4, Iran seized a British-flagged vessel, the Stena Impero, which it continues to hold.

The U.K. Foreign and Commonwealth Office cautioned that there was no connection between Gibraltar’s enforcement of sanctions and Iran’s activities at the mouth of the Persian Gulf.

“There is no comparison or linkage between Iran’s unacceptable and illegal seizure of, and attacks on, commercial shipping vessels in the Strait of Hormuz and the enforcement of EU Syria sanctions by the Government of Gibraltar,” it said in an emailed statement Thursday. “Freedom of navigation for commercial shipping must be respected and international law upheld.”

--With assistance from Christopher Elser, Alex Morales, John Deane and Arsalan Shahla.

To contact the reporters on this story: Jonathan Browning in Gibraltar at jbrowning9@bloomberg.net;Alex Longley in London at alongley@bloomberg.net;Nick Wadhams in Washington at nwadhams@bloomberg.net

To contact the editors responsible for this story: Bill Faries at wfaries@bloomberg.net, ;Alaric Nightingale at anightingal1@bloomberg.net, Tony Czuczka, Helen Robertson

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.