October 23, 2018 | Policy Brief

Syria’s Illicit Imports of Iranian Oil Spike in October

October 23, 2018 | Policy Brief

Syria’s Illicit Imports of Iranian Oil Spike in October

Illicit exports of crude oil from Iran to Syria spiked in the first two weeks of October to roughly 150,000 barrels per day (bpd), more than twice the reported high for previous two-week periods this year. The shipments provide a crucial lifeline for the cash-strapped Assad regime, whose persistent evasion of U.S. and EU sanctions has yet to provoke fully effective enforcement measures.

New data from both Bloomberg and Tanker Trackers indicate a surge of deliveries to the Assad regime, which has maintained control of Syria’s Mediterranean ports since the outbreak of war in 2011. Bloomberg reported 143,000 bpd of deliveries in the first two weeks of October, versus 71,000 bpd for the same period in September. Tanker Trackers estimated the flow at 156,000 bpd, versus 77,000 bpd for early September. While the pace of deliveries may vary substantially during a single month, the amount already received in these two weeks is significant. Even if Syria imported no Iranian oil for the rest of October, this monthly total would represent a peak for 2018.

The rough market value of Iranian deliveries to Syria in the first half of October is $150 million, given mid-month prices of about $75 per barrel. The precise grade of oil exported to Syria is unknown, but Iranian crude generally trades at several dollars below the Brent crude benchmark, which was $80 in mid-October.

It is not clear whether Assad compensates Tehran for its oil or whether the imports amount to a subsidy in kind. Iran has extended lines of credit to Assad worth several billion dollars, but his ability to repay the loans is uncertain. Overall, Iran has spent tens of billions of dollars to prevent the collapse of the Assad regime.

Tracking Iran’s deliveries of crude oil requires a measure of detective work, since its tankers often deactivate their Automatic Identification System (AIS) transponders, especially when approaching Syrian waters. AIS deactivation represents both a major safety hazard and a clear violation of international law.

To disrupt Assad’s oil procurement efforts, the U.S. Treasury imposed sanctions last month on a range of facilitators in Syria, Lebanon, and the United Arab Emirates. Treasury also sanctioned a similar network in 2015.

Building on these initiatives, the president should direct the Treasury and other executive departments to prioritize and intensify their efforts to prevent the shipment of oil to Syria. A potential vulnerability in the Syrian supply chain is the use of privately owned and operated vessels to transport Iranian oil. Treasury can inform the owners and operators they are at risk of sanctions. It can also inform the vessels’ insurers and other service providers of the risk of transacting with firms engaged in illicit commerce.

If private sector vessels refuse to transport Iranian oil to Syria, Iran may employ its own fleet of tankers, either directly or by transferring them to shell companies. Depending on their routes, those tankers may still need to call at foreign ports en route to Syria. The U.S. should work to ensure that those ports uphold their responsibility to deny access to vessels engaged in illicit traffic.

The loss of access to Iranian oil would likely do tremendous damage to Assad’s finances and military capacity. The U.S. should apply such pressure swiftly in order to weaken Assad and raise the cost to Tehran of propping up his regime.


Iran Iran Politics and Economy Iran Sanctions Sanctions and Illicit Finance Syria