US mulls plan to disrupt Iranian oil movement

President Donald Trump's administration is considering a plan to stop and inspect Iranian oil tankers at sea under an international accord aimed at countering the spread of weapons of mass destruction, sources familiar with the matter told Reuters.

Trump has vowed to restore a "maximum pressure" campaign to isolate Iran from the global economy and drive its oil exports to zero, in order to stop the country from obtaining a nuclear weapon.

Trump hit Iran with two waves of fresh sanctions in the first weeks of his second-term, targeting companies and the so-called shadow fleet of ageing oil tankers that sail without Western insurance and transport crude from sanctioned countries.

Those moves have largely been in line with the limited measures implemented during former President Joe Biden's administration, during which Iran succeeded in ramping up oil exports through complex smuggling networks.

Trump officials are now looking at ways for allied countries to stop and inspect ships sailing through critical chokepoints such as the Malacca Strait in Asia and other sea lanes.

Previous attempts to seize Iranian oil cargoes have triggered retaliation by Iran.

The US tried to interdict at least two cargoes of Iranian oil in 2023, under Biden. This prompted Iran to seize foreign ships - including one chartered by Chevron Corp, which sent crude prices higher.

The current low oil price environment gives Trump more options to block Iranian oil flows, from sanctions on tanker companies to seizing ships, according to Ben Cahill, an energy analyst at the Center for Energy and Environmental Systems at the University of Texas.

"I think if prices stay below US$75 a barrel, the White House has more latitude to look at sanctions that would affect, you know, supply from Iran and other countries. It would be much harder to do this in a US$92 per barrel environment," Cahill said.

Aggressive US action could cut Iran exports by some 750,000 barrels per day in the short term, he said, but the longer the sanctions are in place, the less effective they are as Iran and buyers figure out ways around them.

A speedy resumption of oil exports from Iraq's semi-autonomous Kurdistan region would help offset any fall in Iranian exports.

Reuters previously reported that the White House is piling pressure on Iraq to allow Kurdish oil exports to restart or face sanctions alongside Iran.

Despite US sanctions in recent years, Tehran's oil exports brought in US$53 billion in 2023 and US$54 billion a year earlier, largely in trades with China, according to US Energy Information Administration estimates.

Iran relies on oil exports to China for vital revenue. Russia, which faces restrictions on oil exports and broader Western sanctions, is similarly focused on shipping oil to buyers in China and India.

Finland and other Nordic countries have warned in recent months of the dangers of ships sailing close to their shores and the environmental risks they pose to their shores in oil spills if there is an accident.

While European countries have spoken about inspections of ships transporting Russian oil suspected of not having valid insurance, little action has been taken and none mooted for vessels hauling Iranian oil.