US Lawmakers Ask Biden Why Seized Iranian Oil Not Offloaded

A group of US lawmakers have called on the White House to respond to threats that prevent American firms from offloading confiscated oil cargo belonging to Iran. 

In a letter released on Wednesday, the bipartisan group of US lawmakers from the House and Senate have asked the Biden administration to address “unprecedented intimidation” tactics from Iran that have prevented the transfer of seized oil from Suez Rajan, a tanker anchored off the coast of Texas, near Galveston about 50 miles (80 km) from Houston.

The letter was organized by Senator Joni Ernst (R-IA) and Representative Elise Stefanik (R-NY) and signed by Sens. Richard Blumenthal (D-CT), Lindsay Graham (R-SC), Bill Hagerty (R-TN) and Kevin Cramer (R-ND) and Reps. Josh Gottheimer (D-NJ), Jim Banks (R-IN), Don Davis (D-NC) and Max Miller (R-OH).

The US seized the Iranian oil onboard the ship late in May in accordance with the US sanctions, but the oil has reportedly not yet been offloaded as US federal prosecutors have faced challenges in auctioning off the 800,000 barrels of oil aboard the Greek tanker. The lawmakers estimated the value of the oil to be $56 million. 

According to the Wall Street Journal, the US companies are reluctant to unload the oil due to concerns about potential Iranian reprisals, particularly threats of violence by Iran’s Revolutionary Guards. Iran's IRGC navy commander Alireza Tangsiri warned in July that Tehran would retaliate against any oil company involved in unloading the Iranian oil. 

“Companies with any exposure whatsoever in the Persian Gulf are literally afraid to do it,” said a Houston-based energy executive involved in the matter in July. 

Noting that the enforcement of sanctions will become irrelevant if American citizens and companies involved constantly live in fear of Iranian retaliation, the letter reads, “The ability for a designated Foreign Terrorist Organization (FTO) to prevent the transfer of seized assets within US territorial waters is an unprecedented intimidation effort that threatens to undermine our Nation’s security.”

“Current public reporting that such an operation cannot be completed due to Iranian threats against US companies and persons undermines the success of this seizure and imperils the US government’s ability to successfully complete future seizures,” added the lawmakers. "It is imperative that the Administration make clear that Iran and designated Foreign Terrorist Organizations cannot prevent our government from carrying out legitimate law enforcement operations."

US seizures of Iranian oil contribute money to the US Victims of State Sponsored Terrorism Fund (USVSST Fund), which compensates victims of attacks. The current interagency counter-IRGC petroleum seizure program requires 75 percent of the seized profits to be transferred to the fund, which according to an unnamed official, has insufficient assets for a round of payments next year to the nearly 16,000 Americans. 

The program is most effective when properly resourced and enforced, the lawmakers said, noting that “Since 2019, the program has seized over $200 million in Iranian oil. This program, which has also generated over $41 million for the US government's Treasury Forfeiture Fund, is depriving the IRGC of significant resources, which it uses to engage in terrorism targeting American citizens and our allies and partners around the world." 

The call for action to liquidate the confiscated oil came against the backdrop of Washington agreeing to release $6 billion in Iranian funds frozen in South Korea in exchange for five US citizens taken hostage by Tehran. The deal, which is rumored to have other secret aspects, may end up releasing at least $13 billion more in the future.