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Iran reports seizing ship carrying what it calls smuggled fuel in Persian Gulf

Iran said Aug. 4 that it seized a small foreign ship carrying 700,000 liters, or 4,400 barrels, of smuggled fuel in the Persian Gulf as tensions in the area heat up.

The country's Islamic Revolutionary Guard Corps seized the ship near the Farsi Island and took it to Bushehr Port, where its cargo was returned to Qatar Petroleum unit National Oil Distribution Co., the state-run IRNA news agency reported Aug. 4.

The vessel's seven-member foreign crew was also detained, IRNA reported. The ship, which received fuel from other ships to transport them to unnamed Arab countries overlooking the Persian Gulf, was detained on July 31, it said.

Iran and the U.K. are locking horns over Tehran's seizure of U.K.-flagged tanker Stena Impero in the Persian Gulf last month, which was in retaliation to the Gibraltar government's confiscation of an Iranian tanker allegedly carrying crude to Syria.

Iran has denied that the vessel, Panamanian-flagged Grace 1, was headed to Syria. EU sanctions against Syria include a ban on imports of Syrian oil and on upstream investment in the country. The Gibraltar government detained Grace 1 with the help of the Royal Marines.

The Islamic Revolutionary Guards Corps has said it seized the Stena Impero "due to a violation of international laws and regulations while passing through the Strait of Hormuz."

Iran has repeatedly threatened to close or disrupt the Strait of Hormuz should U.S. sanctions block its oil shipments. The strait is a critical chokepoint through which about 30% of the world's seaborne oil transits.

Iranian President Hassan Rouhani previously said the presence of foreign forces in the Gulf region is a source of tension and warned that Britain's seizure of the Iranian ship off Gibraltar will be detrimental to the country.

The U.S. is trying to build a coalition called Operation Sentinel to share the burden of protecting the waterway. U.S. President Donald Trump has questioned the country's role protecting oil shipments through the Strait of Hormuz, arguing that the expensive military presence benefits "very rich" Middle East exporters and Asian importers when the U.S. no longer needs the oil.

Dania Saadi is a reporter with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.