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Fears of Middle East War Grow After Hamas Leader's Killing

Smoke billows on the village of Meiss El-Jabal, along Lebanon's southern border with northern Israel following Israeli bombardment on December 20, 2023, with the Israeli Manara Kibbutz seen on the background, amid increasing cross-border tensions as fighting continues with Hamas militants in the southern Gaza Strip. (Photo by AFP)
Smoke billows on the village of Meiss El-Jabal, along Lebanon's southern border with northern Israel following Israeli bombardment on December 20, 2023, with the Israeli Manara Kibbutz seen on the background, amid increasing cross-border tensions as fighting continues with Hamas militants in the southern Gaza Strip. (Photo by AFP)
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Fears of Middle East War Grow After Hamas Leader's Killing

Smoke billows on the village of Meiss El-Jabal, along Lebanon's southern border with northern Israel following Israeli bombardment on December 20, 2023, with the Israeli Manara Kibbutz seen on the background, amid increasing cross-border tensions as fighting continues with Hamas militants in the southern Gaza Strip. (Photo by AFP)
Smoke billows on the village of Meiss El-Jabal, along Lebanon's southern border with northern Israel following Israeli bombardment on December 20, 2023, with the Israeli Manara Kibbutz seen on the background, amid increasing cross-border tensions as fighting continues with Hamas militants in the southern Gaza Strip. (Photo by AFP)

Fears of a regional Middle East war grew on Saturday after the assassination of Hamas's political leader, blamed on Israel, triggered vows of vengeance from Iran-backed Middle East groups.

The United States said it would move additional warships and fighter jets to the region as the Iran-aligned "Axis of Resistance" readied its response to the killing of Ismail Haniyeh.

The groups from Lebanon, Yemen, Iraq and Syria have already been drawn into the nearly 10-month war in Gaza between Israel and the Palestinian movement Hamas, according to AFP.

Iran on Saturday said it expects one of those groups, Lebanon's Hezbollah, to hit deeper inside Israel and to no longer be confined to military targets.

With such talk growing, the Pentagon said it was bolstering its military presence in the Middle East to protect US personnel and defend Israel.

An aircraft carrier strike group led by the USS Abraham Lincoln will replace one helmed by the USS Theodore Roosevelt in the region, the Pentagon said.

Defense Secretary Lloyd Austin also ordered additional ballistic missile defence-capable cruisers and destroyers to the Middle East and areas under United States European Command, as well as a new fighter squadron to the Middle East.

On Friday, thousands of people in Qatar attended funeral prayers for Haniyeh, who was buried north of the capital Doha two days after his death.

Iran's Revolutionary Guards on Saturday said he was killed by a "short-range projectile" fired "from outside the accommodation area" where he was staying.

Haniyeh had been in Iran to attend the swearing-in of President Masoud Pezeshkian on Tuesday.

Israel, accused by Hamas, Iran and others of the attack, has not directly commented on it.
The killing of the Qatar-based Haniyeh is among a series of tit-for-tat attacks since April that had already heightened fears of a regional conflagration.

His death came hours after Israel struck south Beirut, killing the Hezbollah military commander Fuad Shukr.

Haniyeh's deputy was killed in south Beirut early this year in a strike which a US defence official said Israel carried out.

In another high-profile killing, Israel's army on Thursday confirmed that an air strike in July killed Hamas military chief Mohammed Deif in Gaza.

Israel "delivered crushing blows to all our enemies", said Prime Minister Benjamin Netanyahu this week.

"The risk that the situation on the ground could deteriorate rapidly is rising," British Foreign Secretary David Lammy said in a statement.

Israeli Defense Minister Yoav Gallant met with his visiting British counterpart John Healey on Friday and called for an international coalition to support "Israel's defense against Iran and its proxies", Gallant's office said.

Israel has vowed to destroy Hamas in retaliation for its October 7 attack.

Hamas officials but also some analysts, and protesters in Israel, have accused Netanyahu of prolonging the war.

Far-right members crucial to Netanyahu's ruling coalition oppose any truce.

The war in Gaza has caused widespread destruction and displaced almost the entire population of the territory where, the UN said on Friday, public health conditions "continue to deteriorate."

It said nearly 40,000 cases of Hepatitis A, spread by contaminated food and water, have been reported since the war began.

Since October Hezbollah has been exchanging near-daily fire with Israeli forces, saying it is targeting military positions over the border in support of Hamas.

The strike on Shukr changed the calculus, Iran's mission to the United Nations said on Saturday.

"We expect... Hezbollah to choose more targets and (strike) deeper in its response," said the mission, quoted by Iran's official IRNA news agency.

"Secondly, that it will not limit its response to military targets."

A Lebanese security source, requesting anonymity as they were not authorized to speak to the media, said a Hezbollah member was killed in an "Israeli drone" strike on a vehicle in south Lebanon on Saturday.

Late on Friday, a source close to Hezbollah said Israel carried out strikes on a convoy of trucks entering Lebanon from Syria.

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Iran's Revolutionary Guards Extend Control over Tehran's Oil Exports

Iranians drive as smog obscures the skyline in Tehran, Iran, 18 December 2024. EPA/ABEDIN TAHERKENAREH
Iranians drive as smog obscures the skyline in Tehran, Iran, 18 December 2024. EPA/ABEDIN TAHERKENAREH
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Iran's Revolutionary Guards Extend Control over Tehran's Oil Exports

Iranians drive as smog obscures the skyline in Tehran, Iran, 18 December 2024. EPA/ABEDIN TAHERKENAREH
Iranians drive as smog obscures the skyline in Tehran, Iran, 18 December 2024. EPA/ABEDIN TAHERKENAREH

Iran's Revolutionary Guards have tightened their grip on the country's oil industry and control up to half the exports that generate most of Tehran's revenue and fund its proxies across the Middle East, according to Western officials, security sources and Iranian insiders.

All aspects of the oil business have come under the growing influence of the Guards, from the shadow fleet of tankers that secretively ship sanctioned crude, to logistics and the front companies selling the oil, mostly to China, according to more than a dozen people interviewed by Reuters.
The extent of the Iranian Revolutionary Guard Corps' (IRGC) control over oil exports has not previously been reported.

Despite tough Western sanctions designed to choke Iran's energy industry, reimposed by former US President Donald Trump in 2018, Iran generates more than $50 billion a year in oil revenue, by far its largest source of foreign currency and its principal connection to the global economy.

Six specialists - Western officials and security experts as well as Iranian and trading sources - said the Guards control up to 50% of Iran's oil exports, a sharp increase from about 20% three years ago. The sources declined to be identified due to the sensitivity of the matter.

Three of the estimates were based on intelligence documents about Iranian shipping while others derived their figures from monitoring shipping activity by tankers and companies linked to the IRGC. Reuters was unable to determine the exact extent of the IRGC's control.

The IRGC's growing domination of the oil industry adds to its influence in all areas of Iran's economy and also makes it harder for Western sanctions to hit home - given the Guards are already designated as a terrorist organization by Washington.

Trump's return to the White House in January, however, could mean tougher enforcement of sanctions on Iran's oil industry. The country's oil minister said Tehran is putting measures in place to deal with any restrictions, without giving details.

As part of their expansion in the industry, the Guards have muscled in on the territory of state institutions such as the National Iranian Oil Company (NIOC) and its NICO oil trading subsidiary, according to four of the sources.

When sanctions hit Iran's oil exports years ago, the people running NIOC and the wider industry were specialized in oil rather than how to evade sanctions, added Richard Nephew, a former deputy special envoy for Iran at the US State Department.

"The IRGC guys were much, much better at smuggling, just terrible at oil field management, so they began to get a larger control of oil exports," said Nephew, who is now a researcher at Columbia University.
The IRGC, NIOC, NICO and Iran's foreign ministry did not respond to requests for comment.
RISK APPETITE
The IRGC is a powerful political, military and economic force with close ties to Supreme Leader Ali Khamenei.
The Guards exert influence in the Middle East through their overseas operations arm, the Quds Force, by providing money, weapons, technology and training to allies Hezbollah in Lebanon, Hamas in Gaza, Yemen's Houthis and militias in Iraq.
While Israel has killed a number of senior IRGC commanders over the past year, the oil specialists in its ranks have been able to continue their operations, two Western and two Iranian sources said.
The Iranian government began allotting oil, instead of cash, to the IRGC and Quds Force around 2013, according to Nephew.
The government was under budgetary pressure then because it was struggling to export oil due to Western sanctions imposed over Iran's nuclear program.
The IRGC proved adept at finding ways to sell oil even under sanctions pressure, said Nephew, who was actively involved in tracking Iranian oil activities then.
Iranian oil revenues hit $53 billion in 2023 compared with $54 billion in 2022, $37 billion in 2021 and $16 billion in 2020, according to estimates from the US government's Energy Information Administration.
This year, Tehran's oil output has topped 3.3 million barrels per day, the highest since 2018, according to OPEC figures, despite the Western sanctions.
China is Iran's biggest buyer of oil, with most going to independent refineries, and the IRGC has created front companies to facilitate trade with buyers there, all the sources said.
Oil export revenues are split roughly evenly between the IRGC and NICO, said one source involved in Iranian oil sales to China. The IRGC sells oil at a $1-$2 barrel discount to prices offered by NICO because buyers take a bigger risk buying from the Guards, the person said.
"It depends on a buyer's risk appetite, the higher ones will go for the IRGC, which the US designates as a terrorist group."
Two Western sources estimated that the IRGC offered an even bigger discount, saying it was $5 per barrel on average but could be as much as $8.
The oil is allocated directly by the government to the IRGC and Quds Force. It's then up to them to market and ship the oil - and work out a mechanism for disbursing the revenue, according to the sources and intelligence documents seen by Reuters.
NIOC gets a separate allocation.
CHINESE FRONT
One of the front companies used is China-based Haokun. Operated by former Chinese military officials, it remains an active conduit for IRGC oil sales into China, despite Washington hitting it with sanctions in 2022, two of the sources said.
The US Treasury said China Haokun Energy had bought millions of barrels of oil from the IRGC-Quds Force and was sanctioned for having "materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, the IRGC-QF".
In one oil transaction dated March 16, 2021 involving Haokun and parties including Turkish company Baslam Nakliyat - which is under US sanctions for its trading links to the IRGC - a payment was processed via US bank JP Morgan and Turkish lender Vakif Katilim, according to the intelligence documents.
The transaction took place before the companies were sanctioned. Reuters has no indication JP Morgan or Vakif Katilim were aware of the Iranian connection - highlighting the risks of companies getting inadvertently caught up in the shadow trade.
JP Morgan declined to comment. Vakif Katilim said in a statement: "Our bank performs its activities within the framework of national and international banking rules."
Haokun declined to comment. Baslam did not respond to a request for comment.
'GHOST FLEET'
Quds Force commander Qassem Soleimani, who was killed in a US strike in Baghdad in 2020, had set up a clandestine headquarters and inaugurated that year for the unit's oil smuggling activities, initially staffed by former oil minister Rostam Ghasemi, according to the intelligence documents.
Reuters could not determine where all the oil money funneled through the IRGC goes. The IRGC headquarters and day-to-day operations has an annual budget of around $1 billion, according to assessments from two security sources tracking IRGC activities.
They estimated that the IRGC budget for Hezbollah was another $700 million a year.
"Exact figures remain undisclosed, as Hezbollah conceals the funds it receives. However, estimates are that its annual budget is approximately $700 million to $1 billion. Around 70%-80% of this funding comes directly from Iran," Shlomit Wagman, former director general of Israel’s Money Laundering and Terrorism Financing Prohibition Authority, said separately.
Hezbollah did not respond to a request for comment.
The former Secretary General of Hezbollah, Hassan Nasrallah, who was killed in an Israeli airstrike, said Iran provided the group's budget, including for salaries and weapons.
Iran's main tanker operator NITC, which previously played a key role in exports, also now provides services to the IRGC.
It executes ship-to-ship transfers of Iranian oil onto vessels operated by the IRGC to ship crude into China, according to sources and ship-tracking data. Such transfers are common practice to help disguise the origin of the oil tankers carry.
NITC did not respond to a request for comment.
In August, Israel's National Bureau for Counter Terror Financing, part of the country's defense ministry, imposed sanctions on 18 tankers it said were involved in transporting oil belonging to the Quds Force.
In October, the US Treasury slapped sanctions on 17 separate tankers it said formed part of Iran's "ghost fleet", outside of NITC vessels. It followed up with sanctions on a further 18 tankers on Dec. 3.