Iran Releases South Korean Oil Tanker Seized Over Frozen Funds

South Korea paid $100,000 for the release of the ship—lower than Iran’s asking price of $14 million, according to a Western official briefed on the talks. The South Korean Foreign Ministry didn’t reply to requests for comment.

Iran detained the Hankuk Chemi’s captain until Friday. Some of the crew members had been released earlier and went back to South Korea, while others stayed on the ship for maintenance purposes.

“The health of the crew and captain are sound. The ship’s cargo is also in good condition,” the South Korean Foreign Ministry said. A spokesman for Tehran’s Foreign Ministry said the ship was released “following the completion of investigations” of its alleged misconduct.

The detention was seen by Middle East experts as Tehran’s attempt to force Seoul, an American ally, to release the estimated $7 billion that banks in South Korea froze in 2019 to comply with U.S. sanctions restricting financial transactions with Iran. The Trump administration imposed those sanctions after exiting the 2015 multilateral nuclear deal in 2018.

Hours after the release of the tanker, Iran and the five other remaining parties to the 2015 deal wrapped up a week of talks in Vienna to revive the accord. They said they would reconvene in the Austrian capital next week. American officials were also in Vienna, but did not negotiate directly with their Iranian counterparts, who refused to meet them. Instead the two delegations communicated through European intermediaries shuttling between hotels.

U.S. sanctions are at the heart of the talks in Vienna. Since 2018, Iran has responded to American sanctions by gradually stepping away from its commitments in the nuclear deal, ramping up nuclear activities and limiting access for international inspectors.

The U.S. and Iranian officials said the talks in Vienna this week had been constructive and business-like, but still in the early stages.

The negotiating parties will next week continue work on establishing a roadmap for the U.S. and Iran to return to compliance with the accord.

Iran demands a full lifting of U.S. sanctions before it returns to compliance. But Biden administration officials say they reserve the right to keep some sanctions imposed since 2018 in place, including some targeting Iran’s missile program and its funding of alleged terrorism.

“All the sanctions imposed or reimposed by the Trump administration should be reversed because they were all part of the maximum pressure policy against the JCPOA, and in order to kill the JCPOA,”

Abbas Araghchi,

the head of Iran’s delegation in Vienna, said in an interview, using an acronym for the nuclear pact.

“The United States knows what they have to do to satisfy Iran, and we know what to do to satisfy the [United Nations atomic] agency so we just need to identify the measures,” Mr. Araghchi said.

Due to U.S. pressure on other countries not to deal with Iran, Tehran has an estimated $30 billion in export revenue frozen in foreign accounts, including South Korea.

According to Western officials involved in the talks, European powers weeks ago proposed an arrangement to Tehran, after discussions with Washington, that would deliver Iran $1 billion in frozen oil revenue from South Korea in return for Iran freezing uranium enrichment at 20{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} purity. Iran rejected the offer, demanding the U.S. release all its foreign funds.

A senior Biden administration official said the U.S. had no indication that the release of the tanker was influenced by the negotiations in Vienna.

Seoul has separately been conducting negotiations with Tehran over ways to unlock some of the estimated $7 billion held by two South Korean banks. Seoul has also been in contact with Washington over the possibility of using some of those funds for humanitarian purposes, like providing ambulances or medical equipment to Iran, South Korean officials have said.

Iran has asked South Korea to release at least $1 billion of the $7 billion that is stuck in Seoul, Tehran and Washington officials have previously said. But the Western official briefed on the talks said the U.S. hadn’t raised the issue of the frozen funds in the indirect talks with Iran in Vienna this week.

Iran may have been inclined to send a positive message with the release of the South Korean tanker, amid the talks in Vienna and ahead of a planned visit to Tehran by South Korean Prime Minister Chung Sye-kyun early next week, the Western official said.

Mr. Chung, the government’s second-most senior official, will discuss ways to revive trade between the two countries, the Seoul official told reporters, in case nuclear negotiations result in an easing of sanctions on Iran.

Trade between South Korea and Iran was worth about $12 billion in 2017. The following year, the Trump administration steadily reimposed sanctions on Tehran. The two countries’ trade value fell to less than $200 million in 2020, according to data compiled by the Korea International Trade Association in Seoul.

Write to Andrew Jeong at [email protected], Sune Engel Rasmussen at [email protected] and Benoit Faucon at [email protected]