Washington Iraq is using an obscure Iranian island in the Persian Gulf as a transfer point in an operation that has substantially increased revenues from oil smuggling in recent months, U.S. officials say.
The officials, speaking on condition of anonymity, say the Iraqis have earned between $25 million and $40 million a month, perhaps twice the amount the illicit transactions yielded two years ago.
Meanwhile, Iran's Revolutionary Guards, with minimal sacrifice, are netting an estimated $20 million a month for their role in allowing the vessels to pass through Iranian waters.
"The Iranians don't have to do anything but ensure safe passage," one official said.
The recent increases in the price of oil make the contraband activity all the more profitable.
An average of about seven small oil-laden vessels a day depart Iraq and rendezvous with larger vessels off tiny Qais Island, a tourist center just off the Iranian mainland in the Persian Gulf, the officials said.
Once the transfer of cargo takes place, these vessels can head for almost any destination in need of oil.
The activity is illegal under U.N. resolutions. Sanctions imposed on Iraq in 1990 after its invasion of Kuwait remain in place.
Iraqi commercial activity is largely banned except for an "oil-for-food" program that is designed to meet the humanitarian needs of the Iraqi people. Oil exports under the program are expected to reach $18 billion this year.