Mediaboss Marketing

Tugboats maneuvered the tanker Eternal Fortune into a berth at the Kharg Island oil terminal on Oct. 28, 2023, while it was falsely broadcasting its location as in the Gulf of Oman. The vessel was insured by an American company.

Maxar Technologies

Tug boats maneuvered the tanker Eternal Fortune into a berth at the Kharg Island oil terminal on Oct. 28, 2023 while it was falsely broadcasting its location as in the Gulf of Oman. The vessel was insured by an American company.

Maxar Technologies

For months, as Iran-backed groups attacked U.S. forces and allies in the Middle East, the Biden administration hailed its efforts to restrict Irans oil revenue and the countrys ability to fund proxy militias. The Treasury secretary told Congress that her teams were doing everything that they possibly can to crack down on illegal shipments, and a senior White House adviser said that extreme sanctions had effectively stalled Irans energy sector.

But the sanctions failed to stop oil worth billions of dollars from leaving Iran over the past year, a New York Times investigation has found, revealing a significant gap in U.S. oversight.

The oil was transported aboard 27 tankers, using liability insurance obtained from an American company. That meant that the U.S. authorities could have disrupted the oils transport by advising the insurer, the New York-based American Club, to revoke the coverage, which is often a requirement for tankers to do business.

Instead, the 27 tankers were able to transport shipments across at least 59 trips since 2023, The Times found, with half the vessels carrying oil on multiple journeys.

The Treasury Department did not respond to a question about whether it was aware the ships had transported Iranian oil while insured by the American Club.

The tankers exhibited warning signs that industry experts, and the Treasury, have said collectively warrant greater scrutiny. Among other red flags, the ships are: owned by shell companies, older than average vessels and use a tactic called spoofing to hide their true locations.

Satellite imagery, much of it freely accessible to the public, captured the tankers during their oil transports.

fortune galaxy

Feb. 25, 2023

galaxy star

Mar. 10, 2023

cathay kirin

Mar. 12, 2023

duplic dynamic

Jun. 11, 2023

fortune galaxy

Jun. 24, 2023

fortune galaxy

Jul. 13, 2023

cathay kirin

Aug. 8, 2023

fortune galaxy

Aug. 18, 2023

fortune galaxy

Sept. 4, 2023

galaxy star

Sept. 19, 2023

fortune galaxy

Oct. 4, 2023

eternal fortune

Oct. 29, 2023

eternal success

Nov. 23, 2023

fortune galaxy

Nov. 24, 2023

Sources: Copernicus Sentinel-2, Planet Labs, Maxar Technologies, TankerTrackers.com, Spire Global, MarineTraffic

Satellite images on display represent one of several methods that The Times relied on to locate each tanker.

It is unclear who the U.S. government considers primarily responsible for identifying suspicious tankers. The Treasury is tasked with administering sanctions by investigating and blacklisting individuals or companies participating in illicit activities. But it places some of the burden on insurers to monitor for suspicious behavior through the regular release of advisories and alerts.

To identify the shipments of Iranian oil, The Times built a database of thousands of tankers and their whereabouts using maritime data and satellite imagery. Vessels whose voyage paths showed irregularities were cross-referenced with information provided by Samir Madani, co-founder of TankerTrackers.com, a company that monitors oil shipping.

SynMax and Pole Star, two other companies that monitor shipping, provided additional data.

In late-January, several weeks after the American Club was mentioned at a Congressional hearing titled "Restricting Rogue-State Revenue", coverage for many of the tankers identified by The Times abruptly ended. The company said that the stoppages were the result of its own internal investigations. Five of the vessels are still insured by the company, according to data listed on its website; the American Club said it is still investigating those ships.

The Timess findings come as the Biden administration is under increasing scrutiny from lawmakers and advocacy groups for its handling of sanctions on Iran.

It is very concerning, said Senator Maggie Hassan, a Democrat of New Hampshire, who has filed a bill to strengthen the enforcement of sanctions on deceptive ships.

The United States must use every tool at its disposal to identify, stop and sanction these bad actors, she said. These new revelations highlight the stakes.

In response to Times findings, a Treasury spokesperson said in a statement: Treasury remains focused on targeting Irans sources of illicit funding, including exposing evasion networks and disrupting billions of dollars in revenue.

The spokesperson added that this month the department had taken action against what it called a Hong Kong-based front company, which U.S. officials said had funded Irans Revolutionary Guards Corps.

Kharg Island, pictured in 2017, is one of Irans main oil terminals where many of the American Club-insured tankers loaded oil.

Fatemeh Bahrami/Anadolu Agency via Getty Images

The insurance provided by companies like the American Club is a key factor in the tankers ability to move oil; industry insiders call it a vessels ticket to trade. Most major ports insist that ships have proof of liability coverage, among other requirements, before they can enter and do business.

The American Club is one of only 12 major insurers of its kind, and the only one based in the United States. Specifically, the company says, its policies cover third parties affected during an accident caused by a ships negligence.

Because of these insurers importance to shipping, they have been consulted by the U.S. government when developing sanctions on Russian oil sales.

Daniel Tadros, the American Clubs chief operating officer, said his company has one of the most stringent compliance programs in the industry. But he said that the companys six-person compliance team was overwhelmed each month with hundreds of inquiries about potentially suspicious vessels, and that investigating even a single case takes time.

It's impossible for us to know on a daily basis exactly what every ship is doing, where it's going, what it's carrying, who its owners are, Mr. Tadros said. I would like to think that governments have a lot more capability, manpower, resources to follow that.

He added that the U.S. government had only recently suggested the use of satellite imagery for maritime-related businesses looking for sanctions evasion. Satellite imagery has been used as a ship-tracking tool in the industry for at least a decade.

Shipowners willing to skirt trade restrictions can make more than their normal commissions. But to maintain business connections with the West, including with insurers, they may resort to using deceptive tactics.

Since the start of 2023, the 27 vessels moved roughly 59 million barrels of oil, according to a Times analysis. The calculation is based on a tankers depth in the water before and after the oil was loaded, a measurement used by industry analysts.

There is no official source detailing the amount of oil that leaves Iran. According to estimates from Kpler, a company that monitors global trade, the oil carried by the tankers would amount to roughly 9 percent of Iran's oil exports over that period.

Sources: Copernicus Sentinel-2, Planet Labs, Maxar Technologies, Spire Global, MarineTraffic, TankerTrackers.com

Note: Pickups include those made at Iranian ports as well as via transfer at sea from other ships to American Club-insured ships. The map does not represent all oil pickups The Times found.

Many of the tankers ultimately ended up in China, which has tripled its imports of Iranian oil over the past two years.

Some of the shipments continued into the fall, as one Iran-backed group, Hamas, led the Oct. 7 assault on Israel, and other Iran-aligned militants, like the Houthis in Yemen, launched attacks on shipping routes and U.S. forces in the region.

By then, the tankers had transported at least $2.8 billion in crude oil, based on the lowest reported prices of Iranian oil in 2023.

That dollar amount could be higher. The Times found eleven more tankers, anchored off Iranian oil ports last year, that used deceptive practices and carried American Club insurance. Although there is little other reason for the ships to hide their presence, The Times could not verify whether they loaded oil.

Where contact information was available, The Times sought comment from more than 40 entities linked to the tankers involved in moving Iranian oil. None replied.

Some experts expressed doubt that the American Club was doing everything it could to identify deceptive ships.

Responsible, reputable insurers waste no time in confronting their clients or club members, Mr. Madani of TankerTrackers.com said.

David Tannenbaum, a former sanctions compliance officer for the Treasury Department who now works as a consultant for a compliance advisory company, said his research showed that the American Club covers a large proportion of deceptive vessels when compared with similar insurers.

While weve seen spoofers infiltrate almost all of the major protection and indemnity clubs, they are definitely a leader, he said.

Last week, Bloomberg reported that the American Club had insured more ships suspected of violating sanctions than other comparable insurers, according to data from United Against Nuclear Iran, a privately funded group advocating stronger sanctions on Iran.

(Many of the vessels noted by the group were also identified by The Times. Mr. Tadros, the American Club executive, said his company had removed insurance for the claims it could corroborate. He said in some cases United Against Nuclear Iran presented flawed evidence, which The Times also concluded for one of the accused tankers.)

The Times was able to use satellite imagery and information available to the shipping industry, such as signals that ships transmit to report their purported locations, to identify the tankers.

The tankers deception mainly involved a practice known as spoofing in which vessels broadcast fake route information to hide their true locations. Last August, for example, the tanker Glory broadcast that it was off the coast of the United Arab Emirates when it was really loading oil in Asaluyeh, Iran.

Sources: Copernicus Sentinel-2, Spire Global, MarineTraffic, TankerTrackers.com, SynMax

Note: Locations relative to each other are approximate in time.

In some cases, tankers also conducted ship-to-ship transfers, exchanging goods with another vessel at sea. The practice is common, but can be used to conceal a cargos origin, especially when used with spoofing. Ship-to-ship transfers near Iran frequently occurred just off the coast, such as when the tanker Shalimar took on oil in October. For each transfer, The Times traced the cargo back to Iranian oil terminals.

Sources: Copernicus Sentinel-2, Spire Global, MarineTraffic, TankerTrackers.com

Note: Locations relative to each other are approximate in time.

The Times also found some tanker crews altering the physical appearance of their ships. On one spoofing vessel, a red tarp was spread over its green deck in an apparent effort to disguise itself from satellites.

A month after leaving China, the American Club-insured tanker Irises reaches the Gulf of Oman for at least the fourth time in 2023.

Red tarps appear partially covering the deck of the Irises. The ship begins spoofing its location as it approaches the Persian Gulf.

Elsewhere, a ship owned by the National Iranian Tanker Company loads oil from Kharg Island.

The two ships meet in the Persian Gulf, with more red tarp visible on the Irises deck. The Iranian ship transfers oil to the Irises.

Sources: Planet Labs, Copernicus Sentinel-2, Spire Global, MarineTraffic, TankerTrackers.com

Even though the tankers used deceptive tactics, their spoofing had identifiable patterns. Many pretended to anchor off Oman or in the Persian Gulf for days, while satellite imagery showed they were not there. Some ships even broadcasted signals showing them on land and moving at high speeds, a physical impossibility.

Several of the tankers had a history of picking up oil in other countries under U.S. sanctions. Before they moved the Iranian oil, a Times analysis found, eight of the tankers spoofed their locations while carrying Venezuelan oil that was subject to sanctions. Its unclear if they were insured by the American Club at the time.

One of the tankers did carry American Club insurance when The Times found it likely evading Russian sanctions last year.

The American Clubs role in insuring the 27 tankers could put the company in potential violation of sanctions, industry experts said.

Mr. Tadros disagreed. He said the company includes a clause in its contracts, based on Treasury guidance, that nullifies coverage if a ship violates sanctions. He argued this protects the insurer from being complicit in potential violations.

The American Club takes its obligations seriously and works diligently to comply with sanctions regulations, Mr. Tadros said.

The Treasury office has publicly enforced sanctions on the American Club only once in the past 20 years. In 2013, the office announced that it found the insurer had processed dozens of claims for ships that violated sanctions on Cuba, Sudan and Iran. Treasury officials calculated the penalty for the apparent violations totaled more than $1.7 million.

Ultimately, the office said the American Club did not appear to have been willful or reckless and the case was settled. The company agreed to pay a reduced fine of $348,000.

Sources and Methodology

Times reporters built a database of nearly 20,000 tankers and their owners, operators, managers and insurers by combining information from Equasis; the International Maritime Organization; and Pole Star, a maritime intelligence company. Times reporters cross-referenced this information with the websites of the major insurance companies, which all maintain freely accessible databases of ships they insure.

The publicly available location data of the ships, known as their automatic identification system or AIS, was obtained through MarineTraffic and Spire Global. The platforms show live ship locations around the world and keep records of past voyages.

To detect any irregularities in the AIS paths that may be signs of deceptive practices, The Times used data on spoofing ships provided by TankersTrackers.com, as well as from SynMax, a satellite data analytics company, and Spire Global; and information collected through The Timess own reporting. Reporters then crossed-referenced the sources with satellite imagery.

The satellite imagery used to search for the ships reported and actual locations came from Planet Labs, Maxar Technologies and the European Space Agencys Copernicus Sentinel-2 satellite, which is publicly available. A large share of the spoofing tankers had already been spotted in Iranian waters by TankerTrackers.com.

Go here to read the rest:
The $2.8 Billion Hole in U.S. Sanctions on Iran - The New York Times