Iran has been using a tricky system of oil shipping and transferring to get its heavily sanctioned crude to Asian markets, according to Reuters.
A port called Labuan, which is off the eastern coast of Malaysia, has been serving as a drop-off spot for Iranian crude, according to an investigation by Reuters Freight Fundamentals, which tracks tanker movements around the world. There, the oil is transferred to -- and stored in -- tankers that fly the flag of Panama.
Initial investigations found that those tankers were actually linked to two Asian companies -- one is Singaporean and the other is based in Hong Kong.
The Hong Kong company, Titan, hired out the tankers to a shipping company called Glammarine, recently registered in Labuan. And now Glammarine appears to be working with an organization called Account International Safe Oil, which one source told Reuters was linked to the National Iranian Oil Company.
As it stands, this arrangement is not technically illegal. But given the haziness that still surrounds the business connections between the various companies and countries involved, it is likely that the purpose of the Labuan operation is to avoid strict Western sanctions on Iranian oil trade -- especially since at least one oil transfer so far has occurred in the dead of night.
The sanctions are part of the West's efforts to hurt the Iranian economy and derail Tehran's pursuit of nuclear weaponry.
Those efforts have been in place for years, but a tough round of sanctions was imposed by the United States and Europe in November 2011, following a dire report from the International Atomic Energy Agency. An even tougher round was imposed in June and July 2011, following a March IAEA report that suggested Iran was on the nuclear weapons track.
Iran has always denied these allegations, claiming that its nuclear program is for peaceful purposes like energy and medicine.
Today, Western sanctions are taking quite a toll on the Iranian economy. Crude exports are lower than they have been in two decades. Iranian currency has dropped to its lowest comparative value ever: 25,650 rials for every U.S. dollar, according to Reuters. (The central bank still cites a reference rate of 12,260 rials per dollar.)
But Iran is not out of business yet -- far from it. Despite Western cajoling, several resource-hungry Asian countries cannot resist the Iranian Republic's abundant crude, and have been granted temporary waivers.
The L.A. Times reports that India barters for Iranian oil with goods instead of money -- rice, steel and even medicine have been accepted as payments. Japan is paying billions of dollars just to insure the ships that carry Iran's oil. China skirts trade restrictions by accepting oil shipments on Iran's state-owned tankers, instead of commercial vessels.
The Labuan operation may be helping these countries to import more Iranian oil under the radar. By keeping official records of Iranian imports down, these countries can stay eligible for the sanction waivers they already utilize but must be renewed annually.
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