Fujairah Claims U.S. Seized Iraqi Oil Headed to China

(Bloomberg) — A company owned by the Emirate of Fujairah says a cargo of crude seized by the U.S. under suspicion of being sanctioned Iranian oil was actually Iraqi crude that it had stored offshore at the height of the pandemic.

Fujairah International Oil & Gas Corp., wholly owned by Sheikh Hamad bin Mohammed Al Sharqi, the ruler of the emirate, claims it’s an intermediary seller of the cargo and that it is Iraqi oil, according to a document filed in federal court in the District of Columbia.

The U.S. alleges that Iran’s Islamic Revolutionary Guard Corps and the IRGC-Quds Force covertly shipped the oil abroad, relying on ship-to-ship transfers and falsified documents to disguise the crude’s origin. Iran said the seizure of the cargo was an “act of piracy.”

Read More: Suspected Iranian Oil Finishes Discharging into Houston

The case underscores the challenges facing President Joe Biden in his pledge to restore diplomatic relations with Iran. Biden has proposed that the two nations return to the 2015 international agreement under which Iran agreed to limit its nuclear work in exchange for relief from economic sanctions.

FIOGC said that in June it bought 2 million barrels of crude from an undisclosed Iraqi supplier. The supplier presented bills of lading issued by Iraq’s state oil marketer SOMO as proof of origin, FIOGC said in the legal document. In July, the firm said it chartered a vessel to use as an offshore floating storage facility at the Port of Fujairah in the United Arab Emirates. ​

​In October, FIOGC sold the oil to an unidentified Chinese buyer. Under the agreement, FIOGC was responsible for delivering the crude to China and chartered the supertanker Achilleas for the journey. The U.S. government in December seized the cargo before it could depart, according to the filing.

The Achilleas was rerouted to the U.S. Gulf Coast and the crude was discharged in Houston this month, the document shows. FIOGC claims it retains a financial stake in the oil cargo.

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