U.S. Seeks to Seize Oil Tanker Detained in Gibraltar

(Bloomberg) -- The U.S. is seeking to seize an oil supertanker detained by Gibraltar, potentially deepening a dispute between Iran and the West that has threatened energy supplies from the Middle East.

British forces last month detained the vessel, the Grace 1, on suspicion that it was hauling Iranian crude oil to Syria in violation of European sanctions. A court in Gibraltar was set to release the ship until American authorities intervened.

“The U.S. Department of Justice has applied to seize the Grace 1 on a number of allegations which are now being considered,” the Gibraltar government said in a statement. “The matter will return to the Supreme Court of Gibraltar at 4:00 p.m. today.”

The U.S. made the last-minute request Wednesday night, Joseph Triay, a lawyer for the Gibraltar attorney general, said during a court hearing in the U.K. offshore territory. The ship’s current detention order is due to expire Aug. 17.

U.S. Department of Justice officials didn’t immediately have a comment on the matter. Four crew members from the Grace 1 -- the captain, chief officer and two second mates -- have been released, according to the Gibraltar government.

The American action throws a wrinkle into a diplomatic dispute that is now months in the making and has endangered shipping through the Strait of Hormuz, the world’s most critical chokepoint for oil supplies. Following the detention of the Grace 1 on July 4, Iran later in the month seized a British-flagged vessel, which it continues to hold. A release of the Grace 1 would mark a potential break in the standoff.

Worsening Relations

The ship was hauling about 2 million barrels of crude when it was detained, triggering legal wrangling in which Iranian authorities pushed for the vessel to be released. The seizing of the Grace 1 was “an act of piracy,” Iran’s deputy foreign minister said at the time.

Relations between Iran and the West have grown increasingly tense after the U.S. reimposed sanctions on the Persian Gulf nation last year. The U.S. blamed Iran for recent aggression in the Gulf region, including tanker attacks, and the British Navy last month intervened to prevent Iranian vessels from impeding the journey of a tanker operated by BP Plc. Iran has denied culpability.

The U.K. has put its highest level of security in place for ships passing through the Strait of Hormuz as tensions have spiraled with Iran. It’s also working with the U.S. as part of an international effort to protect shipping in the Persian Gulf. BP has stopped sending vessels and crews through the strait.

Also see: Oil Tankers Perform Vanishing Act in Hormuz as Tensions Escalate

“It’s further evidence, but hardly surprising, that the U.S. is trying to tighten its sanctions on other jurisdictions to stop Iran exporting its oil,” Richard Mallinson, a geopolitical analyst at Energy Aspects Ltd. in London, said of the American effort to seize the Grace 1. “If it were to be handed over to the United States, I think that would be viewed by Iran as an escalation.”

To contact the reporters on this story: Jonathan Browning in London at jbrowning9@bloomberg.net;Alex Longley in London at alongley@bloomberg.net

To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net, Brian Wingfield, John Deane

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