IRGC Seizes a Third Tanker for Fuel Smuggling
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Iran Islamic Revolutionary Guard (IRGC) Navy (Nedsa) has seized another small tanker suspected of smuggling fuel within the Gulf, Nedsa reported on April 8.<\/p>\n
The vessel was not identified, but would have been a small tanker, as it had a crew of six and was carrying 100,000 liters of fuel.\u00a0 The ship was apprehended by patrol craft from the Nedsa\u2019s Second Naval District, and was then taken to the district’s home port of\u00a0Bushehr.<\/p>\n
Two other small tankers, with a total of 25 crew and carrying three million liters of diesel, were also seized and taken to Bushehr on March 31, also by patrol craft from the Nedsa Second Naval District.\u00a0<\/p>\n
Iranian seizures of small tankers carrying refined fuels, whether petrol or diesel, have been commonplace in the Gulf for years.\u00a0 This smuggling occurs to exploit the arbitrage between heavily subsidized refined fuels sold in Iran, and higher fuel prices prevailing elsewhere in the Gulf.\u00a0<\/p>\n
The principal smuggling route is from Iran to Iraq, an attractive destination for smugglers because of endemic corruption amongst coastguard, police and customs personnel.\u00a0The biggest differential between Iranian selling prices and pump prices for fuel are in the Bahrain and the United Arab Emirates, where subsidies have been largely removed and the price of fuel is fixed monthly depending on market movements.\u00a0Customs interceptions in Bahrain and the UAE are relatively efficient, so smugglers often have to resort to transshipment to smaller craft at sea in order to avoid detection.\u00a0Oman, Kuwait, Qatar and Saudi Arabia still subsidies fuel prices, making these countries of lesser attraction to smugglers.<\/p>\n
Seizures of such tankers are often portrayed as being part of Iran\u2019s campaign to expand its regional influence, or a reprisal for\u00a0some form of anti-Iranian action. But the reality is that this is a local issue, with Iran and the GCC having common cause in clamping down on the smuggling carried out by these small tankers.\u00a0Subsidies paid out in Iran are a huge drain on the government budget.\u00a0Within the GCC, VAT, sales and corporation taxes, depending on the country concerned, are effectively avoided by purchasing smuggled fuels sold on the black market.\u00a0<\/p>\n
Many of the smuggling operations are bankrolled by Gulf businessmen, just as pirate expeditions were centuries ago.\u00a0The enterprises often employ stateless captains and crews, and vessels that are incorrectly registered or were apparently scrapped years ago.\u00a0 When Iran seizes an unregistered tanker\u00a0that previously called in\u00a0a GCC port, the GCC country concerned is often keen not to be identified and is reluctant to intervene on behalf of those detained.<\/p>\n
Beyond fuel,\u00a0there is a\u00a0thriving industry of small-boat smuggling across the Gulf.\u00a0The flow of goods is determined by subsidy arbitrage, but also by the fluctuations in seasonal supply and demand, all determined by market forces.\u00a0 In one month, trader boats from Iran can be bringing out pistachio nuts\u00a0and returning with appliances.\u00a0In the next month it will be live sheep being taken south and cigarettes heading north.<\/p>\n<\/div>\n
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