In an effort to hobble the Iranian government, the EU joined the US this week in refusing to buy oil from the Islamic Republic. At the same time, the US will now penalise banks of any nation that make oil deals with Iran, with a few notable exceptions. The plan was announced at the beginning of the year, but did not go into effect until July 1. This gave European economies time to cope with the embargo, but it also gave Iranian oil companies time to do precisely the same. One of ways Iran is disguising its shipments is by simply re-flagging and re-naming their tankers. Iran now has over ten ships flying the flag of the tropical island nation Tuvalu. In addition, it has also been giving ships English names. According to the Financial Times, their fleet now boasts the Victory, the Truth and the Precious. Iran has also taken to turning off its transponders, which are mandatory tracking devices on shipping vessels. These blackouts obscure the amount of oil being stored at sea, hide ship-to-ship transfers, and conceal the name of potential sanction busting customers. There is also a pipeline cutting through the heart Egypt that would allow Iranian tankers to avoid the Suez Canal. The BBC reported that Iranians are bringing their oil to Egypt and transport it from Ain Sukna, on the Red Sea to Alexandria on the Mediterranean. There, non-Iranian tankers could pick up the oil from Alexandria's ports and bring it to refineries in Europe. Egyptian bureaucrats, not American diplomats, would then have the final say in how much Iranian oil made it to market. One thing that Iran can do in order to get around the banking lockdown is to avoid that system all together. According to Bloomberg, they can do this by trading in hard assets. Fuel-thirsty India was being rumoured to offer gold in exchange for Iran's oil. China was said to be thinking along similar lines. However, such nefarious dealing ended up being unnecessary as the final American sanctions specifically exempted top buyers of Iranian oil, including IndiaChina. This adds a final note to the complication of sanctions. While the US must cope with the various ways of getting oil our of Iran, they also need to deal with those world powers who continue to demand a share of Iran's oil.
