US unloads seized Iranian oil amid threats of IRGC retaliation

Growing stand-off over tanker threatens to derail recent moves by Tehran and Washington to find compromise over dual-citizen prisoners held in Iran

An IRGC speedboat moves alongside the USS Bataan in the Strait of Hormuz in the Arabian Gulf. AP

Suspected Iranian oil was being transferred from a US-owned tanker to another vessel off the coast of Texas on Sunday, in what senators have said is a seizure of the cargo by American authorities, following a breach of sanctions.

The US has not commented officially but on August 16 a bipartisan group of senators urged US authorities to speed up transfer of the oil cargo, which they said had been seized as part of a sanctions enforcement operation. Iran has said it will retaliate if the oil transfer goes ahead.

The Suez Rajan, owned by California-based Oaktree Capital Management, had been suspected of taking sanctioned Iranian oil to a client in Asia, in a 2022 investigation by the campaign group United Against a Nuclear Iran.

The vessel was then unable to unload its cargo and sailed on towards the US, where it stayed for a period of time, possibly as US authorities decided on a course of action.

The oil cargo was purported to have been transferred from the Suez Rajan, right, to the Virgo in this operation in the South China Sea in February. AP

The Associated Press showed the Marshall Islands-flagged Suez Rajan was undergoing a ship-to-ship transfer of its oil with another tanker, the MR Euphrates, near Galveston, about 70 kilometres south-east of Houston on Saturday.

It comes amid a turning point in US-Iran tensions, as Washington attempts to open dialogue after failed attempts to revive a 2015 nuclear deal, which allowed UN inspections of Iranian nuclear bases in exchange for the US easing trade sanctions.

A deal to release five US-Iranian dual citizens, in exchange for Washington unlocking $6 billion in frozen Iranian funds, is expected to be completed next month.

But US sanctions on Iranian oil exports remain a major point of contention and both sides have used naval forces to seize tankers in the Gulf region, with the US taking Iranian oil shipments and Iran retaliating with its own raids.

This month, the US said it was considering deploying armed personnel on tankers travelling close to Iranian territorial waters, after sending more fighter jets to the region, as well as an additional warship.

Iran’s Islamic Revolutionary Guard Corps has warned it will respond to the seizure of the oil on the Suez Rajan.

“We hereby declare that we would hold any oil company that sought to unload our crude from the vessel responsible and we also hold America responsible,” Rear Admiral Alireza Tangsiri warned. “The era of hit and run is over and if they hit, they should expect to be struck back."

On Sunday, Iranian state media released a video dated from Thursday that showed the USS Bataan with small IRGC fast boats trailing it as it travelled through the Strait of Hormuz, the narrow mouth of the Arabian Gulf through which 20 per cent of the world's oil passes.

One portion appeared to have been taken from a drone above the Bataan, while another claimed that the IRGC hailed the Bataan over the radio and threatened to “open fire” on an American helicopter if it entered Iranian airspace.

Commander Rick Chernitzer, a spokesman for the US Navy’s Bahrain-based 5th Fleet, acknowledged to the Associated Press that the Bataan had transited through the strait in recent days. He declined to elaborate.

A photograph earlier released by the Navy showed F-35 fighter jets providing cover for the Bataan and the USS Carter Hall, a landing ship accompanying it.