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  • Iranian vessel Bavand waiting near the port of Paranagua, Brazil, July 18, 2019.

    Iranian vessel Bavand waiting near the port of Paranagua, Brazil, July 18, 2019. | Photo: Reuters

Published 25 July 2019

Brazilian Supreme Court President Dias Toffoli ruled Thursday that Petrobras must provide fuel to Iranian ships.

Since the beginning of June, two Iranian commercial ships have been stranded at the port of Paranagua, in the state of Parana, in Brazil because the state-owned company, Petrobras has so far refused to supply fuel to them, in line with sanctions imposed by U.S. President Donald Trump on Iran, according to comments made by President Jair Bolsonaro to reports earlier this week. 

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"You know we are aligned with the U.S. policy. That is why we do what we have to do," replied Brazil’s far-right President Jair Bolsonaro when questioned about this unusual case, which happens despite the fact that the U.S. sanctions on Iran contemplate exceptions for the sale of food and medicine.

The vessels Bavand and Termeh entered Brazilian territory to load corn two months ago. In fact, one of them is already loaded with about 50,000 tons of corn that could be completely spoiled in a short time.

According to the Latin American news outlet Pagina 12, a third of all Brazilian corn exports go to Iran and a good part of the area used in the Brazilian fertilizer industry comes from Iran. Iran also imports Brazilian soy and meat. 

Both ships belong to Sepid Shipping, an Iranian company blacklisted by Washington. However, the fuel for the vessels was acquired by Eleva, a Brazilian urea importer. Throughout this commercial process, therefore, the diesel was not acquired by Iranian money.

However, Petrobras claims that the urea is one of the U.S. banned products, an argument that does not stand given the fact that the Eleva transaction occurred before May and was authorized from Washington.

"This is one of the most absurd things I have ever seen. It seems that there are no limits... These Iranian ships came to load corn in Brazil. They need fuel to return and Petrobras denied supplies because 'it was running the risk of being sanctioned by the U.S.' "The meme reads, "Toffoli rules Petrobras to supply fuel to Iranian ships. "

On July 13, Iran's ambassador to Brazil Seyed Ali Saghaeyan went to the foreign minister in Brasilia to request information on the situation of the stranded ships. “He left without hearing anything concrete. The issue must reach the Supreme Court,” Pagina 12 reported.

During his visit, the Iranian ambassador told officials that if the federal government refuses to supply diesel to the vessels, his country could easily find new suppliers of corn, soy and meat.

Although this possibility could mean "bad news" for the Brazilian agriculture industry, “there are no signs” that the Iranian ships impasse will affect bilateral trade relations, according to Bolsonaro’s Foreign Trade Secretary Lucas Ferraz.

Meanwhile, on Thursday morning, Brazilian Supreme Court President Dias Toffoli ruled that Petrobras must provide fuel to Iranian ships. The Bolsonaro government has yet to react to the ruling.

Historically Brazil has maintained a favorable trade balance in its relations with Iran. For instance, in the first half of 2019, Iran imported about 2.5 million tons of Brazilian corn, while the South American country exported goods to Iran for US$1.299 million and bought Iranian products for US$27 million, which means Brazil obtained a favorable trade balance of US$1,272 million.

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