Iran Tries To Deny Reports About Declining Oil Exports

Deputy leader Naim Qassem told Reuters that Hezbollah was ready for action against Israeli gas operations in disputed sea waters, a day after a London-based vessel operated by drilling company Energean arrived at Israel’s bidding to develop the Karish gas field.

Energean, which is listed in London and Tel Aviv, said its floating production storage and offloading vessel was set up 80 km (50 miles) west of Haifa and would be operational by the third quarter of 2022.

Qassem said Hezbollah would act only with the authorization of the Lebanese government, which has warned Israel against the offshore work. Beirut said Monday that with discussions stalled for a year it would now invite Amos Hochstein, a United States mediator, to help resolve matters. Lebanon and Israel have no diplomatic relations.

“When the Lebanese state says that the Israelis are assaulting our waters and our oil, then we are ready to do our part in terms of pressure, deterrence and use of appropriate means – including force,” Qassem said.

“The issue requires a decisive decision from the Lebanese state,” he added, and that Hezbollah “urged the government to hurry up, to set a deadline for itself.” Qassem said Hezbollah would act even at the risk of a wider conflict with Israel.

Preventing escalation

Lebanon hopes offshore gas reserves could alleviate its chronic financial problems, including one of the world’s largest public debts, but is currently struggling to form a government after parliamentary elections last month.

Caretaker Prime Minister Najib Mikati wrote on Twitter that the government aimed at “completing the negotiations to demarcate the southern maritime border and to work on concluding the issue as fast as possible to prevent any escalation that would not serve the state of stability in the region.” Mikati said any Israeli drilling or exploration in a disputed area was “a provocation and an act of aggression.”

With several gas discoveries made in the 2000s in the eastern Mediterranean and Lebanon slow to exploit the resource, there is a significant area where Israel and Lebanon dispute the border.

In a statement on Sunday, the Lebanese presidency said Lebanon had written to the United Nations that Karish was within the disputed area, but Israeli Energy Minister Karine Elharrar told Tel Aviv radio 103 FM there was “unequivocally no” encroachment by Israel.

“Everything to do with the dispute will be resolved in the framework of negotiations between us and Lebanon, mediated by the United States,” Israeli Defense Minister Benny Gantz said in televised remarks.v

While Lebanon and Israel have not been involved in a major conflict since 2006, the fall in Russian energy exports, including both gas and oil, has pushed up world energy prices and increased the attraction of moving ahead with new projects.

Iran, which according to the BP 2021 Statistical Review of World Energy, has the world’s second largest gas reserves, after Russia, and the third largest oil reserves, is closely aligned to Hezbollah. Some analysts suggest Iran has an opportunity to increase its own energy exports, especially to Europe, assuming US sanctions are lifted with restoration of the 2015 Iran nuclear deal, the JCPOA (Joint Comprehensive Plan of Action).

The Terrorist Financing Targeting Center of the Office of Foreign Assets Control at the Department of the Treasury on Monday targeted a broad range of financiers of terrorism from a variety of regional terrorist designated organizations, including two groups affiliated the IRGC, whose “goal is to pave the way for Iran to exert greater influence in Bahrain and beyond.”

“The targets included three individuals associated with Iran’s Islamic Revolutionary Guard Corps Qods (Quds) Force, four ISIS-associated individuals and one company, six Boko Haram financiers, and terrorist groups Saraya al-Ashtar and Saraya al-Mukhtar,” read the treasury’s statement.

According to the treasury, Ali Qasir, Meghdad Amini, and Morteza Hashemi are part of two networks directed by and providing financial support to the Quds force and its Lebanese proxy group Hezbollah. The complex networks of intermediaries allow the Quds Force to obfuscate its involvement in selling Iranian oil.

Amini and Qasir are financial facilitators who direct a network of nearly 20 individuals and front companies, located in multiple countries, that has facilitated the movement and sale of tens of millions of dollars’ worth of gold, electronics, and foreign currency. Hashemi controls multiple companies based out of Hong Kong and mainland China and has used his access to the international financial system to broker contracts aimed at laundering vast sums of money.

CBI governor Ali Salehabadi said on Monday that the bank has the largest cash currency reserve in the history of the country, “therefore we have no problem in balancing supply and demand in the foreign exchange market.”

His remarks came as the bank has reportedly started injecting cash dollars into the market to stop the current freefall of the Iranian rial as it has hit record lows against major currencies, while nuclear talks with the United States remain in limbo, prices are rising and popular protests continue.

Iran has increased oil exports despite United States sanctions since last year and claims to have been able to repatriate the revenues. However, it is not clear why the rial is falling and the economic crisis continuing if it has large foreign currency reserves.

The rial has been sliding since mid-March when year-long multilateral talks in Vienna to revive the 2015 nuclear agreement known as the JCPOA came to an abrupt halt. Washington and Tehran apparently were too far apart on some issues, including Iran’s demand that its Revolutionary Guard should be removed from the US list of terrorist organizations.

Since 2018, when Washington withdrew from the 2015 nuclear deal with six powers and reimposed sanctions, Iran's economic crisis has deepened with inflation rate reaching 50 percent and the rial losing over 75 percent of its value.

With oil prices up 50 percent in 2022 to almost $120 a barrel, Bloomberg reported a claim from Vitol Group, the world’s biggest independent crude trader, that the US might want to see more Iranian oil flow given mid-term elections looming in November.

Washington has since 2018, with its ‘maximum pressure’ sanctions, threatened punitive action against any third party buying Iranian crude or dealing with Tehran’s financial sector. While this slashed Iran’s exports from 2.5 million barrels per day (bpd) in 2017 to 400,000 bpd in 2020 with many buyers wary of being punished by the US, Iran is now selling around 800,000 bpd, mainly to China, and has developed means of hiding the trade from prying eyes.

Opec+, led by Saudi Arabia and Russia, agreed last week to accelerate output increases and President Joe Biden’s scheduled visit to Riyadh, although postponed until July, may signal an improvement in strained Saudi-US relations even if Riyadh maintains its good relations with Moscow.

But Vitol’s head of Asia Mike Muller told Bloomberg that prospects for the global oil market were confused by constraints on Russian exports and by production weaknesses across Opec. “There are people who think the market’s going to $135-$140 a barrel,” he said. “And there are people who think we’re going below $100 again.”

US gasoline hits $4.80

Analysts and diplomats are sanguine over prospects for renewing the 2015 Iran nuclear deal, the JCPOA (Joint Comprehensive Plan of Action), which would require the US ending ‘maximum pressure’ and lead to an additional 500,000-1 million bpd of Iranian oil reaching world markets.

Iran has around 100 million barrels in storage that could be eased onto the market even more quickly should the US turn a “blind eye” and ‘allow’ Iran to sell more oil. While Republicans and many Democrats oppose easing any Iran sanctions, especially ahead of Tehran returning its nuclear program to the limits set by the lapsed JCPOA, gasoline reaching $4.80 a gallon in the US, up from $3.80 in late February, piles political pressure on Biden and the Democratic Party.

Muller told Bloomberg he did not expect the US seizure of an Iranian-flagged vessel off Greece last month, which prompted Iran to detain two Greek tankers in the Persian Gulf, to signal more US tanker seizures.

Lawrence Norman of the Wall Street Journal tweeted that a well-informed source dismissed Vitol’s report that the Biden Administration might ‘allow’ Iran to sell more oil.

Critics of the Biden administration and supporters of ‘maximum pressure’ have accused the US of being lax in not taking more punitive action against buyers of Iranian crude. Nonetheless, Jason Brodsky, of the advocacy group United Against a Nuclear Iran, dismissed the Bloomberg report as “speculation.”

“We have only one earth and those that seek to protect the planet should not be prosecuted for doing so,” said the Danish environmentalist, ahead of the World Environment Day, June 5. One of those jailed, Niloufar Bayani, who was a consultant for UNEP between 2012 and 2017.

Bayani was arrested along with Morad Tahbaz, Amir Hossein Khaleghi, Taher Ghadirian, Sepideh Kashani, Hooman Jokar, Abdolreza Kouhpayeh, Sam Rajabi, and Kavous Seyed-Emami in 2018 on charges of espionage. All were members of the Persian World Heritage Foundation, an NGO dedicated to conserving wildlife in Iran, and are serving sentences from four to 10 years. Seyed-Emami, the NGO’s founder, was found dead in his cell two weeks after his detention, with the authorities reporting suicide and the family denying the claim.

Human Rights Watch has reported the detainees have been subject to ‘torture’ during incarceration, and that no evidence of any crime has been produced in public, with convictions obtained in special security courts.

The family of Tahbaz, who holds British and United States as well as Iranian citizenship, has criticized the British government over an unfilled expectation he would be released when two other British nationals – Nazanin Zaghari-Ratcliffe and Anoosheh Ashuri – were freed by Iran in March after the British government honored a 40-year debt to Iran of £400 million ($500 million).