Amid escalating tensions in the Middle East, Iran has announced a major decision to publicly auction US and Israeli commercial vessels, along with their cargo, worth billions of dollars, which it had seized from the Persian Gulf and the Sea of Oman. Senior Iranian judiciary official Hassan Abdolian-pour said the vessels would no longer be held idle at Iranian ports, and that the auction would proceed only after completion of the legal process.
Notably, Iran will not deposit the proceeds from the sale of these ships and cargo into its government treasury. Instead, the funds are intended as compensation for the families of Iranian citizens killed, and for those severely affected, by US military strikes and sanctions. Iran described the auction proceeds as a form of restitution for the loss of life and property its country has suffered due to US sanctions.
For several years, Iran has been seizing foreign oil tankers passing through the Persian Gulf and the Strait of Hormuz, citing violations of safety regulations and marine pollution. Iran maintains that whenever the US blocks its oil tankers, it retaliates by intercepting vessels belonging to the US and its allies. Amid its conflict with Israel, Iran has also targeted vessels linked to Israeli companies in the Red Sea.
This decision by Iran has triggered strong anger from the US and Israel, who allege that Iran’s actions are illegal under international maritime law and amount to piracy. Following the auction announcement, the US Department of Defense is preparing to increase naval patrols in the Persian Gulf, raising the risk of direct military confrontation between the two sides.
Iran’s auction decision is also likely to have a significant impact on global trade and oil supply. News of ship seizures and auctions in the Persian Gulf is expected to sharply raise maritime shipping insurance costs. Since a third of the world’s crude oil passes through this region, any rise in tensions could send international oil prices soaring once again.