Vitol buying and selling Iranian fuel oil

Vitol, the world’s largest oil trader, is buying and selling Iranian fuel oil, undermining Western efforts to choke the flow of petrodollars to Tehran and put pressure on Iran’s suspected nuclear weapons program.

Vitol last month bought two million barrels of fuel oil, used for power generation, from Iran and offered it to Chinese traders, Reuters established in interviews with 10 oil trading, industry and shipping sources.

Vitol issued a statement saying Vitol Group is in compliance with all international laws on trade with Iran.

“A Bahraini subsidiary company purchased a spot cargo of fuel oil from a non-Iranian counterparty in July 2012. The fuel oil delivered under contract was of Iranian origin. Vitol Group companies no longer purchase any product of Iranian origin,” Vitol said, without elaborating.

Swiss-based Vitol is not obliged to comply with a ban imposed in July by the European Union on trading oil with Iran because Switzerland decided not to match EU and U.S. sanctions against Tehran.

The company earlier in the year stopped trading Iranian crude oil from its main European offices before the July 1 EU embargo deadline. But the trading sources said it has continued to deal in Iranian fuel oil from the Middle East.

The tale of the cargo of Iranian fuel oil involves tanker tracking systems being switched off, two ship-toship transfers, and blending of the oil with fuel from another source to alter the cargo’s physical specification.

Vitol has said previously it is in compliance with sanctions against Iran, but has declined to say whether or not it would follow the strict EU regulations rather than Switzerland’s.