Iranian Tanker Sails Into Mediterranean: What Happens Next?

(Bloomberg) -- The fate of the Iranian oil tanker Adrian Darya 1 remains unclear days after being released by authorities in Gibraltar.

The tanker, which had been impounded off Gibraltar since early July, finally set sail on Sunday after local authorities rejected a U.S. bid to detain the ship. Iran warned Washington against interfering with the voyage, while the U.S. has threatened sanctions against any party dealing with the vessel.

Where is the ship now?

The tanker has been moving east in the Mediterranean since departing Gibraltar and is signaling the Greek port of Kalamata. The vessel is now sailing under the Iranian flag. The ship was previously named Grace 1 and flew the flag of Panama.

Will the U.S. attempt to seize the vessel?

It’s already tried once and failed. A U.S. court approved a government petition to seize the vessel and oil cargo, but authorities in Gibraltar didn’t act on the request. While the U.S. could again seek to arrest the Adrian Darya 1 if the tanker stops at another port in the Mediterranean, Iranian officials will try to avoid that risk.

Any attempt by the U.S. Navy to capture the vessel or impede resupply at sea would mark a significant escalation in recent tensions between the U.S. and Iran. Already holding one British vessel, Iran would be almost certain to respond by increasing its harassment of traffic through the Strait of Hormuz. The U.S. Sixth Fleet referred Bloomberg to the U.S. Justice and Defense Departments for questions concerning the tanker.

Why did Gibraltar allow the ship to leave?

The government of Gibraltar says European Union regulations didn’t allow it to seek a court order to seize the tanker, which the U.S. accuses of breaching its sanctions by exporting Iranian oil. That’s because of “differences in the sanctions regimes applicable to Iran in the EU and the U.S.,” according to a statement from the Gibraltar government. “The EU sanctions regime against Iran -- which is applicable in Gibraltar -- is much narrower than that applicable in the U.S.”

Is the vessel still carrying Iranian crude?

Yes, it appears to be. The draft of the ship -- how deep it is sitting in the water -- is still reported as being 22.1 meters, which indicates that its full cargo of about 2 million barrels of crude oil is on board. The draft is manually entered by the captain into the ship’s Automatic Identification System, so it could be wrong, but there is no evidence that the cargo was discharged while the vessel was anchored off Gibraltar.

Where is the ship heading?

Vessel-tracking data have shown Kalamata as the destination since Sunday. This probably won’t be its final destination, as the port is too small to accommodate a ship the size of the Adrian Darya 1 and Greek authorities have said they won’t assist the tanker.

The tanker isn’t heading for Greece, Prime Minister Kyriakos Mitsotakis said in an interview with France 24 TV aired Thursday. If the vessel were to sail to Greece, a mutual legal assistance agreement between the U.S. and that nation could leave the ship open to seizure by U.S. authorities, according to Stephen Askins, a partner at maritime law firm Tatham & Co.

Cyprus wouldn’t allow the Iranian tanker to enter its territory were the vessel to make such a request, a Cypriot diplomat said, asking not to be identified in line with policy.

Where will the cargo end up?

It remains unclear where the crude on the Adrian Darya 1 will be offloaded. Iran gave assurances to the government of Gibraltar that the ship wouldn’t sail to Syria.

The most likely course of action is for the ship to discharge its cargo onto smaller vessels in a process known as a ship-to-ship transfer. Those smaller tankers would then deliver the cargo to its final destination. Before doing that, the Adrian Darya 1 would probably switch off the transponder that signals its position and "go dark" in an attempt to conceal its actions. This may not be enough to hide a ship that has become so closely watched.

Can the vessel get back to Iran?

The ship cannot get back to Iran if it continues on its current course without first offloading at least some of its cargo. A fully-laden tanker is simply too big to pass through the Suez Canal.

Even if the Adrian Darya 1 could traverse that link, that route poses the risk that the vessel could be seized by Egypt at the request of the U.S. While Iranian tankers continue to pass through the Suez Canal into the Mediterranean, some have been prevented from making the journey.

If the ship is prevented from passing through the canal, or it is deemed too risky to attempt making that passage, the only alternative route to Iran would be to retrace the voyage back out into the Atlantic Ocean and around the tip of Africa. That journey is about 11,500 miles from Gibraltar to the Strait of Hormuz and the vessel would certainly need to take on fuel before attempting it and that could prove problematic.

Who will provide the ship with fuel and provisions?

Obtaining fuel and provisions could prove difficult for the Adrian Darya 1. The U.S. has warned that ports, banks and anyone else who does business with the vessel or crew might be subject to sanctions, according to two administration officials. That would make it difficult to refuel in the Mediterranean, as European or North African ports and fuel suppliers will probably be cautious about dealing with the ship.

One option would be to resupply with fuel and provisions by ship-to-ship transfer from a vessel owned by an entity that has no exposure to the U.S., or is prepared to risk being sanctioned. A Russian or Syrian vessel could fit that bill.

--With assistance from Anthony DiPaola, Paul Tugwell and Stephen Voss.

To contact the reporters on this story: Julian Lee in London at jlee1627@bloomberg.net;Verity Ratcliffe in Dubai at vratcliffe1@bloomberg.net

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

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