Iran Warns Brazil Over Stranded Ship Barred From Refueling

(Bloomberg) -- Iran has threatened to cut its imports from Brazil unless it allows the refueling of at least two Iranian ships stranded off the Brazilian coast, a sign of the global repercussions of U.S. sanctions on the Islamic republic.

Iran’s ambassador in Brasilia, Seyed Ali Saghaeyan, told Brazilian officials on Tuesday that his country could easily find new suppliers of corn, soybeans and meat if the South American country refuses to permit the refueling of the vessels. Brazil exports around $2 billion to Iran a year, mostly commodities like corn, meat and sugar. Tehran buys one third of all Brazil’s corn exports.

While corn shipments to Iran jumped over 30% last year compared to 2017, other agricultural exports items fell, according to Brazil’s government data. Beef shipments to Iran declined 38% and sugar tumbled 84% in the same period.

“I told the Brazilians that they should solve the issue, not the Iranians,” Saghaeyan said in a rare interview at the Iranian Embassy in Brasilia. “If it’s not solved, maybe the authorities in Tehran may want to take some decision because this is a free market and other countries are available.”

State-controlled oil company Petroleo Brasileiro SA refuses to supply the ships -- which have been floating for over a month off the port of Paranagua, about 450 kilometers (280 miles) south of Sao Paulo -- due to the risk of U.S. sanctions. Petrobras has said it was a business decision and other companies could sell fuel to the vessels. Without the fuel, the ships carrying Brazilian corn are unable to return to Iran. While Brazil has a long history of good relations with Tehran, President Jair Bolsonaro’s commitment to ripping up the country’s traditional foreign policy has put those ties in doubt.

As a strong supporter of U.S. President Donald Trump, Bolsonaro warned exporters of the risk of trading with Iran, adding that Brazil sides with the U.S. on its policy toward the Middle East country.

“We are aligned to their policies. So we do what we have to,” Bolsonaro told reporters this week.

To resolve the stand-off, Iran is considering sending fuel to the stranded ships, although this option would take longer and prove costly, Saghaeyan said.

“Independent and big countries like Brazil and Iran should work together without interference from any third party or country,” he added. Saghaeyan has requested a meeting with Brazil’s foreign minister, Ernesto Araujo, but has yet to receive an answer.

Brazil’s foreign office said in a statement it’s working with the court that will rule on the ships. It added that the case has been filed under seal.

To contact the reporters on this story: Samy Adghirni in Brasilia Newsroom at sadghirni@bloomberg.net;Sabrina Valle in Rio de Janeiro at svalle@bloomberg.net

To contact the editors responsible for this story: Juan Pablo Spinetto at jspinetto@bloomberg.net, Bruce Douglas, Walter Brandimarte

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