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August 15, 2019 4:00 PM, EDT

Iran Oil Tanker Released by Gibraltar as US Eyes Detention

Iranian oil tanker Grace 1 sits anchored off the Strait of GibraltarIranian oil tanker Grace 1 sits anchored off the Strait of Gibraltar on July 20, 2019. (Marcelo del Pozo/Bloomberg News)

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Iran is racing to return an oil supertanker to international waters after a Gibraltar court determined it couldn’t wait for the United States to take action that would prolong the six-week detention of the vessel for allegedly violating trade sanctions.

The ship, the Grace 1, had been held in Gibraltar after British forces seized it last month on suspicion of hauling Iranian crude oil to Syria. While the U.S. sought to block the vessel’s release, the Gibraltar Supreme Court on Aug. 15 said American authorities hadn’t put in a legal application. Iran provided assurance that the ship wouldn’t sail to a sanctioned destination.

“In light of the assurances we have received, there are no longer any reasonable grounds for the continued legal detention of the Grace 1 in order to ensure compliance” with European sanctions, the Gibraltar government said in an emailed statement.

The decision now essentially sets up a race between Iran and the U.S. over the ship’s fate. The vessel is bound for a port in the Mediterranean, Iran’s Mehr news agency said, citing Jalil Eslami, deputy for maritime affairs at the Iranian ports and maritime organization. Tanker-tracking data compiled by Bloomberg show that the vessel hadn’t moved as of 7:25 p.m. London time on Aug. 15.

“Separately, the United States Department of Justice has requested that a new legal procedure for the detention of the vessel should be commenced,” the Gibraltar government said in its statement. “That is a matter for our independent Mutual Legal Assistance authorities who will make an objective, legal determination of that request for separate proceedings.”

U.S. officials didn’t immediately respond to requests for comment.

Diplomatic Row

The seizure of the tanker sparked a diplomatic row, underscoring tense relations between Iran and the West that have only worsened since the U.S. re-imposed sanctions on the Persian Gulf state last year. Tensions have been high in the region in recent months amid a spate of vessel attacks and detentions, which have threatened shipping in the Strait of Hormuz, the world’s most critical chokepoint for oil shipments.

Following the detention of the ship July 4, Iran seized a British-flagged vessel, the Stena Impero, which it continues to hold.

Iranian oil tanker Grace 1 sits anchored off the Strait of Gibraltar

British forces seized the Grace 1 on July 4, 2019. (Marcelo del Pozo/Bloomberg News)

Gibraltar’s decision to release the Grace 1 “is a satisfactory result for the U.K.,” Cara Hatton, an analyst at Falanx Assynt, a geopolitical and risk consultant, said in an emailed statement. It “fully justifies Britain’s initial seizure of the ship, and increases the likelihood that Iran will now release the Stena Impero without giving the impression that the countries are engaged in a tanker swap.”

The U.K. Foreign and Commonwealth Office cautioned that there was no connection between Gibraltar’s enforcement of sanctions and Iran’s activities at the mouth of the Persian Gulf.

“There is no comparison or linkage between Iran’s unacceptable and illegal seizure of, and attacks on, commercial shipping vessels in the Strait of Hormuz and the enforcement of EU Syria sanctions by the Government of Gibraltar,” it said in an emailed statement. “Freedom of navigation for commercial shipping must be respected and international law upheld.”

The Gibraltar government said in its statement that it held several meetings with Iranian representatives this month and last to negotiate the tanker’s fate, and on Aug. 13, the Islamic Republic agreed that the ship’s final destination wouldn’t be subject to European Union sanctions.

Iran agreed to re-flag and insure the vessel, which was carrying about $140 million in crude oil to the Baniyas refinery in Syria. It will now travel under the Iranian flag.

Four crew members from the Grace 1 — the captain, chief officer and two second mates -- have been released, according to the Gibraltar government. The vessel’s captain has no intention of going back on the ship, said his lawyer, John Wilkinson. “He wants to go home to India,” he said. Most of the 28 crew are on board, he said.

With assistance from Christopher Elser, Alex Morales, John Deane and Arsalan Shahla.