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Iran’s Revolutionary Guards Extend Control Over Tehran’s Oil Exports, Sources Say

Iran’s Islamic Revolutionary Guard Corps (IRGC) Commander-in-Chief Major General Hossein Salami reviews military equipment during an IRGC ground forces military drill in the Aras area, East Azerbaijan province, Iran, Oct. 17, 2022. Photo: IRGC/WANA (West Asia News Agency)/Handout via REUTERS

Iran’s Islamic Revolutionary Guard Corps (IRGC) have tightened their grip on the country’s oil industry and control up to half the exports that generate most of Tehran’s revenue and fund its proxies across the Middle East, according to Western officials, security sources, and Iranian insiders.

All aspects of the oil business have come under the growing influence of the Guards — an Iranian military force and internationally designated terrorist organization — from the shadow fleet of tankers that secretively ship sanctioned crude, to logistics and the front companies selling the oil, mostly to China, according to more than a dozen people interviewed by Reuters.

The extent of the IRGC’s control over oil exports has not previously been reported.

Despite tough Western sanctions designed to choke Iran’s energy industry, reimposed by former US President Donald Trump in 2018, Iran generates more than $50 billion a year in oil revenue, by far its largest source of foreign currency and its principal connection to the global economy.

Six specialists — Western officials and security experts as well as Iranian and trading sources — said the Guards control up to 50 percent of Iran’s oil exports, a sharp increase from about 20 percent three years ago. The sources declined to be identified due to the sensitivity of the matter.

Three of the estimates were based on intelligence documents about Iranian shipping while others derived their figures from monitoring shipping activity by tankers and companies linked to the IRGC. Reuters was unable to determine the exact extent of the IRGC’s control.

The IRGC’s growing domination of the oil industry adds to its influence in all areas of Iran’s economy and also makes it harder for Western sanctions to hit home — given the Guards are already designated as a terrorist organization by Washington.

Trump’s return to the White House in January, however, could mean tougher enforcement of sanctions on Iran’s oil industry. The country’s oil minister said Tehran is putting measures in place to deal with any restrictions, without giving details.

As part of their expansion in the industry, the Guards have muscled in on the territory of state institutions such as the National Iranian Oil Company (NIOC) and its NICO oil trading subsidiary, according to four of the sources.

When sanctions hit Iran’s oil exports years ago, the people running NIOC and the wider industry were specialized in oil rather than how to evade sanctions, added Richard Nephew, a former deputy special envoy for Iran at the US State Department.

“The IRGC guys were much, much better at smuggling, just terrible at oil field management, so they began to get a larger control of oil exports,” said Nephew, who is now a researcher at Columbia University.

The IRGC, NIOC, NICO, and Iran’s foreign ministry did not respond to requests for comment.

RISK APPETITE

The IRGC is a powerful political, military, and economic force with close ties to Supreme Leader Ayatollah Ali Khamenei.

The Guards exert influence in the Middle East through their overseas operations arm, the Quds Force, by providing money, weapons, technology, and training to terrorist allies Hezbollah in Lebanon, Hamas in Gaza, Yemen’s Houthis, and militias in Iraq.

While Israel has killed a number of senior IRGC commanders over the past year, the oil specialists in its ranks have been able to continue their operations, two Western and two Iranian sources said.

The Iranian government began allotting oil, instead of cash, to the IRGC and Quds Force around 2013, according to Nephew.

The government was under budgetary pressure then because it was struggling to export oil due to Western sanctions imposed over Iran’s nuclear program.

The IRGC proved adept at finding ways to sell oil even under sanctions pressure, said Nephew, who was actively involved in tracking Iranian oil activities then.

Iranian oil revenues hit $53 billion in 2023 compared with $54 billion in 2022, $37 billion in 2021, and $16 billion in 2020, according to estimates from the US government’s Energy Information Administration.

This year, Tehran’s oil output has topped 3.3 million barrels per day, the highest since 2018, according to OPEC figures, despite the Western sanctions.

China is Iran’s biggest buyer of oil, with most going to independent refineries, and the IRGC has created front companies to facilitate trade with buyers there, all the sources said.

Oil export revenues are split roughly evenly between the IRGC and NICO, said one source involved in Iranian oil sales to China. The IRGC sells oil at a $1-$2 barrel discount to prices offered by NICO because buyers take a bigger risk buying from the Guards, the person said.

“It depends on a buyer’s risk appetite, the higher ones will go for the IRGC, which the US designates as a terrorist group.”

Two Western sources estimated that the IRGC offered an even bigger discount, saying it was $5 per barrel on average but could be as much as $8.

The oil is allocated directly by the government to the IRGC and Quds Force. It’s then up to them to market and ship the oil — and work out a mechanism for disbursing the revenue, according to the sources and intelligence documents seen by Reuters.

NIOC gets a separate allocation.

CHINESE FRONT

One of the front companies used is China-based Haokun. Operated by former Chinese military officials, it remains an active conduit for IRGC oil sales into China, despite Washington hitting it with sanctions in 2022, two of the sources said.

The US Treasury said China Haokun Energy had bought millions of barrels of oil from the IRGC-Quds Force and was sanctioned for having “materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, the IRGC-QF.”

In one oil transaction dated March 16, 2021 involving Haokun and parties including Turkish company Baslam Nakliyat — which is under US sanctions for its trading links to the IRGC — a payment was processed via US bank JP Morgan and Turkish lender Vakif Katilim, according to the intelligence documents.

The transaction took place before the companies were sanctioned. Reuters has no indication JP Morgan or Vakif Katilim were aware of the Iranian connection — highlighting the risks of companies getting inadvertently caught up in the shadow trade.

JP Morgan declined to comment. Vakif Katilim said in a statement: “Our bank performs its activities within the framework of national and international banking rules.”

Haokun declined to comment. Baslam did not respond to a request for comment.

‘GHOST FLEET’

Quds Force commander Qassem Soleimani, who was killed in a US strike in Baghdad in 2020, had set up a clandestine headquarters and inaugurated that year for the unit’s oil smuggling activities, initially staffed by former oil minister Rostam Ghasemi, according to the intelligence documents.

Reuters could not determine where all the oil money funneled through the IRGC goes. The IRGC headquarters and day-to-day operations has an annual budget of around $1 billion, according to assessments from two security sources tracking IRGC activities.

They estimated that the IRGC budget for Hezbollah was another $700 million a year.

“Exact figures remain undisclosed, as Hezbollah conceals the funds it receives. However, estimates are that its annual budget is approximately $700 million to $1 billion. Around 70 percent to 80 percent of this funding comes directly from Iran,” Shlomit Wagman, former director general of Israel’s Money Laundering and Terrorism Financing Prohibition Authority, said separately.

Hezbollah did not respond to a request for comment.

The former Secretary General of Hezbollah, Sayyed Hassan Nasrallah, who was killed in an Israeli airstrike, said Iran provided the group’s budget, including for salaries and weapons.

Iran’s main tanker operator NITC, which previously played a key role in exports, also now provides services to the IRGC.

It executes ship-to-ship transfers of Iranian oil onto vessels operated by the IRGC to ship crude into China, according to sources and ship-tracking data. Such transfers are common practice to help disguise the origin of the oil tankers carry.

NITC did not respond to a request for comment.

In August, Israel’s National Bureau for Counter Terror Financing, part of the country’s defense ministry, imposed sanctions on 18 tankers it said were involved in transporting oil belonging to the Quds Force.

In October, the US Treasury slapped sanctions on 17 separate tankers it said formed part of Iran’s “ghost fleet,” outside of NITC vessels. It followed up with sanctions on a further 18 tankers on Dec. 3.

The post Iran’s Revolutionary Guards Extend Control Over Tehran’s Oil Exports, Sources Say first appeared on Algemeiner.com.

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Report: IDF Probes Whether Houthis Used Iranian Cluster Bomb-Bearing Missile

Houthi leader Abdul-Malik al-Houthi addresses followers via a video link at the al-Shaab Mosque, formerly al-Saleh Mosque, in Sanaa, Yemen, Feb. 6, 2024. Photo: REUTERS/Khaled Abdullah

i24 NewsThe Israeli military said Saturday it launched a probe into the failure of its defenses to fully intercept a missile launched by Yemen’s Houthi jihadists, parts of which struck not far from the Ben Gurion airport on Friday night.

According to the Ynet website, one of the hypotheses being examined is that the projectile contained cluster munitions, similar to those used by Iran to fire at Israeli cities during the 12-day war in June. Cluster munitions pose a challenge to interceptors as they disperse smaller explosives over a wide area.

In June, Iran fired several missiles carrying scattered small bombs with the aim of increasing civilian casualties.

The IDF said on Saturday that its initial review suggests the ballistic missile from Yemen likely fragmented in mid-air. Five interceptors from various systems engaged with the missile, including THAAD, Arrow, David Sling & Iron Dome.

Authorities said that shrapnel impacted a house in the central Israeli moshav of Ginaton, yet no one was hurt, with the fragment landing in the house’s backyard.

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Iran Forces Kill Six Militants, IRNA Reports, Israel Link Seen

The Iranian flag is seen flying over a street in Tehran, Iran, Feb. 3, 2023. Photo: Majid Asgaripour/WANA (West Asia News Agency) via REUTERS

Iranian security forces shot dead six militants in a clash in southeastern Iran on Saturday, a day after armed rebels killed five police officers in the restive region, the official news agency IRNA reported.

IRNA said evidence showed the group was linked to Israel and may have been trained by Israel‘s Mossad spy agency. There was no immediate Israeli reaction to the allegation.

Another two members of the militant group were arrested, the report said. All but one of the militants were foreign, it added, without giving their nationality.

Iranian police said this month they had arrested as many as 21,000 suspects during the 12-day war with Israel in June.

Iran’s southeast has been the scene of sporadic clashes between security forces and armed groups, including Sunni militants and separatists who say they are fighting for greater rights and autonomy.

Tehran says some of them have ties to foreign powers and are involved in cross-border smuggling and insurgency.

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Benny Gantz Urges Time-Limited National Unity Government to Further Chances of Hostage Deal

Israeli Defence Minister Benny Gantz attends his party’s meeting at the Knesset, Israeli parliament in Jerusalem, June 27, 2022. REUTERS/Ronen Zvulun

i24 NewsBlue and White Party leader Benny Gantz on Saturday called on Prime Minister Benjamin Netanyahu and opposition politicians to form a temporary national unity government to further the chances of bringing home the hostages held in Gaza.

Addressing Netanyahu, Yair Lapid and Avigdor Liberman, Gantz said that the proposed government’s two supreme priorities would be the release of Israeli hostages held by the jihadists of Hamas and instituting universal conscription in Israel by ending the exemption from military service enjoyed by the ultra-Orthodox.

Upon attainment of the goals, the government would dissolve and call an election.

“The government’s term will begin with a hostage deal that brings everyone home,” Gantz said in a video address. “Within weeks, we will formulate an enlistment outline that would see our ultra-Orthodox brethren drafted to the military and ease the burden on those already serving. Finally, we will announce an agreed-upon election date in the spring of 2026 and pass a law to dissolve the Knesset [Israeli parliament] accordingly. This is what’s right for Israel.”

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