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Top recycler GMS receives US approval for scrapping ships that are sanctioned
The CEO of the world's largest ship recycler said that Dubai-based GMS won approval from the U.S. Government to scrap four containers ships which were subject to?Iran related sanctions. This could pave the way for Washington to reduce its shadow fleet?of?such vessels. The fact that hundreds of ships are not insured or complying with environmental safety standards has helped Iran and Russia to circumvent sanctions. They also pose a risk of fuel spills and oil leaks along busy sea routes. A mechanism approved for scrapping these vessels can be used to encourage their removal from circulation. This will reduce environmental risks, and help better control trade in crude oil and goods sanctioned. Anil Sharma, founder and CEO of GMS, said this week that GMS had been in talks with U.S. officials for months regarding taking over ships subject to sanctions. Sharma stated that "these are ships moving from a rules-based regime into a non-rules-based, which creates a big problem for all while they are trading." GMS purchased the four ships in its first private seller transaction from an unnamed seller that it claimed was not affected by the sanctions. GMS, a US-incorporated company, purchased a bulk carrier flying the North Korean flag in 2019. However, the vessel was then sold to the U.S. Government at auction for recycling. Companies like GMS are prohibited from dealing with vessels that have been sanctioned. Instead, they use shell companies and name changes to disguise their true ownership. Sharma stated that the U.S. authorities will not grant "blanket licenses" but would rather see money flows and "proper report" in order to make sure the proceeds do not end up at sanctioned entities. U.S. Treasury officials didn't immediately respond to an inquiry for comment. The value of scrapping such vessels can reach tens or even hundreds of millions of dollars depending on their type and weight. GMS reported that the four container ships had crews and insurance and would likely be heading to India to?recycle?. Sharma said GMS also targeted oil tankers that were hit by sanctions but that the business would only be feasible when the U.S. and Israeli war against?Iran ends. He said that the conflict had trapped hundreds of ships in the Gulf, and it was unclear how many Iranian-linked vessels were damaged by U.S. or Israeli airstrikes. The tanker market has been so strong, that people haven't had the motivation to recycle. Reporting by Jonathan Saul, Timothy Gardner and Tomaszjanowski
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The EU has said that European satellite operators will get the majority of mobile spectrum. Non-EU competitors will receive the rest.
The European Commission announced on Wednesday that non-European satellite companies such as Elon Musk's Starlink or Amazon's low earth orbit satellite business can bid for European mobile satelite spectrum next year, but the majority of the frequencies are reserved for European businesses. The EU executive's move aims to allow for new operators on the market after the expiration of licenses held by U.S. firms Viasat and EchoStar next year. The new allocation system is part of an EU push to boost tech sovereignty in the bloc by promoting European players. This was driven by concerns over China's rise as a technological power and the dominance by U.S. technology giants during a period of tensions between the U.S. The 2GHz band is perfect for direct-to-direct communication, allowing users to bypass telecoms providers. It also allows for critical communication capabilities. Henna Vikkunen, EU Tech?chief, said that "high-capacity satellite connectivity widely available is essential for strengthening the resilience of EU communication networks." She said that satellite connectivity was also vital for the government services of Europe and their critical communications. According to the Commission, the new allocation system will allow one-third of the mobile satellite spectrum to be reserved for government use, such as military and security. This will be provided by an EU operator who will integrate this capability with the EU’s IRIS2 array of 290 satellites. IRIS2 is Europe's response Starlink. The EU executive confirmed a report that two thirds of the spectrum would be divided equally among EU and non EU operators for commercial purposes. (Reporting and editing by Inti landauro, Foo Yunchee)
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Maguire: Early heatwave in Asia signals potential summer pressure on coal and gas
The temperatures in many of Asia's biggest cities are above normal, prompting the use of air conditioners that consume a lot of energy. This is happening weeks before the peak of summer thermometer readings. LSEG data shows that temperatures in a number of parts of China and Southeast Asia, including India, South Korea, Japan and South Korea, have recently risen well above long-term averages. They are expected to continue to rise for several weeks. This sustained stretch of hot weather is likely to spur an increase in the use of air conditioners, which will?increase strain on generators who are responsible for supplying electricity. In order to ensure a continuous supply of electricity, utilities in Asia will have to increase the use of coal- and gas-fired plants. This will cause a drawdown of coal and natural gas stocks, which will then need to be replenished when summer arrives. The increased competition between Asian utilities for fuels that generate electricity could spark a new strength on the global coal and natural gas markets. These markets have been already roiled due to the U.S./Israeli conflict with Iran, and the resulting disruption of shipping through the Strait of Hormuz. HEATING UP Even though the northern hemisphere's official summer begins on June 1, millions of households in Asia have already experienced temperatures that are well above normal. LSEG data show that since the middle of May the average temperature readings for Seoul, South Korea have been around 13% higher than the long-term mean. This has prompted "extreme heat alerts" by the Korea Meteorological Administration. These?warnings will be triggered if the maximum daily perceived temperature exceeds 38 degrees Celsius (100,4 degrees Fahrenheit). Since mid-May, Shanghai temperatures have been around 12% higher than normal. In Tokyo, readings have averaged?10% over normal. In India, extreme heat has also been recorded in several towns. These readings were above 40 C (104 F), and people sought shelter inside air-conditioned buildings or homes. Under Pressure Power firms are already under pressure as they struggle to meet the increased demand for electricity. The air-conditioning system is notoriously energy-intensive. However, it has become more popular in South and Southeast Asia due to the rising temperatures and humidity levels. According to the International Energy Agency, the number of homes with air conditioning systems will increase from 36% in 2012 to 60% by the year 2050. The surge in space cooling demand is likely to place an even greater strain on global power grids than the data centre boom. This is because the data centers are concentrated in regions that have more developed power systems and can accommodate more demand. Power firms in Asia are struggling to meet demand for homes and businesses due to the current heatwave. Authorities in Vietnam, India, and the Philippines have all issued warnings about power output. If the hot, humid weather continues into the peak summer season, we can expect to hear more warnings about power outages and requests for a reduction in power usage. COAL-HEAVY POWER FOUNDATIONS Over half of Asia's power is still generated by fossil fuel plants, despite the rapid growth in solar and wind farm generation in recent years. In 2025, coal-fired power plants will generate around 52% (or more) of Asia's electricity. They'll remain the backbone for the region's energy system in the near future. Around 10% of Asia's power is generated by natural gas plants. This share was expected to grow in the future, particularly?in wealthy economies that are closing down outdated coal plants. The volatility of natural gas prices and the supply of liquefied gas (LNG), in recent years, has caused a slowdown in the development of gas-fired power plants. This means that coal will continue to be the main source of power in Asia, at least in the short term. This means that coal import orders by Asian utilities are likely to increase as we approach the summer peak months. The price of coal should therefore rise, and this will put pressure on global and regional energy prices. In Asia, there will also be an increase in demand for LNG and natural gas. This is especially true in areas with few alternatives to power and where the power consumption is expected to continue to rise due to temperatures above average. This means that hot spells in Asia could further tighten the global coal and gas market this summer and worsen the energy shocks caused by the U.S.-Israeli war on Iran. These are the opinions of the columnist, an author for. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn, X and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets 7 days a weeks.
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South Korea claims that the attack on a ship in Strait of Hormuz was likely a result of an Iranian missile
The South Korean Foreign Ministry said Wednesday that a?attack? on a cargo vessel operated by local shipper HMM earlier in this month, likely involved an Iranian antiship missile. The Iranian Embassy in Seoul didn't immediately respond to our request for comment. The assessment was made at a press conference to announce the results of the government's?investigation? into the attack on the bulk-carrier that occurred on May 4, which resulted in a fire, and damage to the lower stern hull. Park Yoon-joo said that "various pieces of evidence pointed toward Iran," adding that Seoul had not definitively determined who was behind the attack or whether it was intentional. The investigation looked at debris of unidentified objects found inside the ship following the attack. The analysis revealed that the ship named Namu was attacked twice. While the first warhead didn't explode, the second one did. The ministry stated that the components in the debris indicate the items were probably made in Iran. Park noted that the engines looked similar to those made by Iranian manufacturers. One component even had markings which appeared to have been used by an Iranian manufacturer. Park stated that the warheads looked similar to those of Iranian anti-ship missiles Noor and Qader. He said that South Korea would summon the Iranian ambassador in order to deliver a message of protest and share the findings of the investigation. Park said that Seoul would also ask Iran to 'take responsibility measures' in order to prevent a repeat of the incident. He refused to speculate as to why a South Korean vessel would have been targeted. Seoul, he said, could not determine the intent of the attacker without knowing their decision-making process. Unknown to the official, a South Korean defence official stated that, from a maritime perspective, firing two missiles indicated an intent to cause damage. U.S. president Donald Trump stated'soon after' the incident that Iran fired at the South Korean ship, and urged Seoul join U.S. led efforts to secure shipping in the strait. Tehran had previously denied responsibility for the attack. Reporting by Heejin KIM, Joyce Lee, Brenda Goh and Ed Davies
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Source: Air India reduces June-July flights by 22% because of high jet fuel prices
Air India, India's second largest?airline will reduce domestic flights by?22% in June and July, according to a source familiar with its plans. The industry is grappling with an increase in jet fuel prices in response to the Iran War. These cuts come after the airline reduced its international routes to create room for foreign carriers to increase flights into and out of India. Air India announced in a?statement that between June and August, it "temporarily streamlined operations on certain domestic route" These adjustments are a result of the impact that high fuel prices have had on operations. Air India will monitor the demand and operating conditions with an eye on restoring frequencies once 'conditions stabilize,' a spokesperson added. The'source' familiar with plans said that the cuts for August had not yet been finalised. She declined to give her name as she was not authorized to disclose the information. The aviation industry was blindsided by the rise in jet fuel prices caused by the Iran War. Fuel can account for as much as a quarter or more of an airline's operating costs, which forces them to increase fares and cancel unprofitable flights. Air India has recently posted a record annual loss of over $2 billion. This was also impacted by Pakistan's?"ban" on Indian carriers in its airspace, and the strong U.S. dollar. The airline is owned by Singapore Airlines and the Tata Group. The New Indian Express had reported earlier that IndiGo, India's largest carrier, will reduce its domestic operations by as much as 7 percent between June and August. IndiGo's spokesperson has not responded to a comment. Air India and its budget airline Air India Express have a combined 26.5% of the domestic Indian air travel market, while IndiGo has 63.3%. (Reporting from Ananya Palyekar and Abhijith Gaapavaram, both in Bengaluru; Editing and proofreading by Sherry Phillips and Edwina gibbs).
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China reports that Xinhua says it is not acceptable for third parties to interfere with Panama ties.
During a meeting between the Panamanian Foreign Ministry Javier Martinez-Acha and China's foreign minister Wang Yi, Xinhua's official news service reported that Beijing was prepared to 'deepen practical collaboration with Panama'. It also urged Central American countries?to protect Chinese firms' 'rights'. Wang, who met Acha at a United Nations Security Council Meeting in New York said 'China-Panama ties shouldn't be subjected to third-party intervention, Xinhua reports. This is a reference to U.S. pressuring over Chinese-linked facilities near the Panama Canal which handles 5% global maritime trade. The meeting follows months of tension about the future of the two major container terminals located at Balboa and Cristobal near the Pacific and Atlantic entries to the canal, but operated separately. Panama's Supreme Court ruled in late January that the legal framework supporting a 1997 concession - and a subsequent 2021 extension - which allowed a subsidiary listed on the Hong Kong Stock Exchange, CK Hutchison, to operate terminals, was unconstitutional. China and Hong 'Kong authorities oppose the ruling against CK -Hutchison port concessions. They call it "an act of bad faith." The cancellation was a result of U.S. pressure to curb Chinese influence in the area around the canal. CK 'Hutchison has launched an international arbitration against Panama, accusing the authorities of stealing property. They have also demanded damages in excess of $2 billion.
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SpaceX's Starship Test Strengthens IPO Case, but Obstacles Remain
SpaceX's Starship launch, which was upgraded on Friday, made enough progress to maintain the momentum behind?Elon Musk’s $1.75 trillion IPO. However Musk warned that the rocket's full reusability is still a work-in-progress. Starship is crucial?to lowering SpaceX’s launch costs, expanding Starlink’s?satellite?business - its main cash generator - and supporting future endeavors such as space-based computing and deployment of orbital AI-data-center satellites, and possibly human missions to Mars and the moon. "SpaceX didn't need perfection in this Starship flight. Mark Vena CEO of SmartTech Research said that it needed to show that the upgraded vehicle was moving in the right directions. The company spent over $15 billion on developing what they hope will be a rocket that can carry far greater payloads than current launch systems. SpaceX's first V3-iteration Starship test flight, its 12th since 2023 and first Starship prototype, was a success on all counts. The spacecraft was splashed down in the Indian Ocean after a series of mock satellites were deployed. It failed to land the Super Heavy booster in a controlled manner, and it fell into the Gulf of Mexico. Vena says that even an "imperfect" test can be used to strengthen the case for investment if it shows measurable progress towards full reusability. Analysts and investors are bullish about the IPO. They believe that Musk will fulfill the high-risk promises he made in SpaceX’s IPO filing. Musk is known for turning engineering?bets involving high risk into dominant businesses. James Bruegger said that full reusability was the key to lowering launch costs. "That's the real value." The company has itself warned that delays in the development of satellites or AI infrastructure could be hindered by rising costs. This is in line with concerns raised by some investors who are concerned that Starship may get stuck in a loop of fixing and new failures without ever proving a complete working system. The Starship launch reduced the risk of the Starship being stuck in a loop. It doesn't eliminate all execution risk, said Jesse Nacht a MarketVector Indexes research associate. "Unless there was a major catastrophe, I do not think expectations would be changed too much." 'LUKEWARM SUCCESS' Antoine Grenier is the partner and head space consulting at Analysys Mason. He said that "lukewarm" success was a positive outcome and perhaps?the best. He said that "total failure would've been problematic. Total success would've sparked a lot of excitement for the IPO." Grenier said that the seven-month gap since the last flight meant that SpaceX had to launch before its IPO, because failing to do so "would have raised further questions" for investors evaluating SpaceX's execution rate. The roadshow for this highly anticipated IPO will take place on June 4. If successful, it could raise up to $80 billion - the largest ever offering. Investors increasingly evaluate SpaceX as more than a satellite launcher and provider of future AI infrastructure. Musk defended xAI's trajectory on Tuesday, noting that the company, which is only three years old, is still at its infancy compared with rivals OpenAI or?Anthropic. He also said its models would be "great." Analysts say that SpaceX is still a long way from proving Starship's ability to operate economically and reliably at scale. SpaceX must demonstrate successful launches, payload deployments, orbits, and landings of the booster and vehicle before it can deploy the system on a large scale for the construction of a megaconstellation orbital data centres, said Austin Moeller.
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Maguire: Early heatwave in Asia signals potential summer pressure on coal and gas
The temperatures in many Asian cities are above normal, prompting the use of air conditioners that consume a lot of energy. This is weeks ahead of the usual peak of summer temperatures across the region. Data compiled by LSEG show that temperatures in China, Japan and India,?South Korea, and Southeast Asia are well above long-term averages and will remain so for several weeks. This prolonged period of hot weather is likely to cause a surge in the use of air conditioners, which will put a 'extra strain' on power generators who are responsible for supplying electricity. In order to ensure that power is available around the clock, utilities in Asia will have to increase their use of coal- and gas-fired plants. This will cause a drawdown of coal and natural gas stocks, which will then need to be replenished when summer arrives. The increased competition between Asian utilities for fuels that generate electricity could spark a new strength on the global coal and natural gas markets. These markets have been already roiled due to the U.S./Israeli conflict with Iran, and the resulting disruption of shipping through the Strait of Hormuz. HEATING UP Even though the northern hemisphere's official summer begins on June 1, millions of households in Asia already experience temperatures that are well above normal. LSEG data show that since the middle of May the average temperature readings for Seoul, South Korea have been around 13% higher than the long-term mean. This has prompted "extreme heat alerts" by the Korea Meteorological Administration. These warnings are activated when the maximum daily perceived temperature exceeds 38 degrees Celsius (100,4 degrees Fahrenheit). Since mid-May, the temperatures in Shanghai have been around 12% higher than normal. In Tokyo, readings are around 10% higher on average. In India, extreme heat has also been recorded in several towns. These readings have prompted people to seek refuge in air-conditioned buildings and homes. Under Pressure Power firms are already under pressure as they struggle to meet the increased demand for electricity. The air-conditioning system is notoriously energy-intensive. However, it has become more popular in South and Southeast Asia due to rising temperatures and high levels of humidity. According to the International Energy Agency, global air conditioning systems are expected to increase from 36% by 2022 to 60% in 2050. This is due to rapid?building-out' of living spaces across the hottest areas of Asia, Africa, and the Middle East. The surge in space cooling demand is likely to place an even greater strain on global power grids than the data centre boom. This is because the data centers are concentrated in regions that have more developed power systems and can accommodate more demand. Power firms in Asia are struggling to meet demand for homes and businesses due to the current heatwave. Authorities in Vietnam, India, and the Philippines have all issued recent warnings about power output. If the hot, humid weather continues into peak summer period, we can expect to hear more warnings about power outages and requests for a reduction in power usage. COAL-HEAVY POWER FOUNDATIONS Over half of Asia's power is still generated by fossil fuel plants, despite the rapid growth in solar and wind farm generation in recent years. In 2025, coal-fired power plants will generate around 52% Asia's electricity supplied by utilities and will "remain the backbone" of the region's energy system for the near future. Around 10% of Asia's power is generated by natural gas plants. This share was expected to grow in the future, particularly in wealthy economies where coal plants will be shut down. The volatility of natural gas prices and the supply of liquefied gas (LNG), in recent years, has caused a slowdown in the development of gas-fired power plants. This means that coal will continue to?bear the brunt' of Asia's energy needs, at least in the short term. This means that a rise in coal imports from Asian utilities is to be expected as we approach the summer peak months. This should increase coal prices and further pressure global and regional energy costs. In Asia, there will also be an increase in demand for LNG and natural gas, particularly where there are few alternatives to power and where the power consumption is expected to continue to rise due to temperatures above average. This means that the hot spells expected in Asia this summer could further tighten the global coal and gas market, and intensify the energy shocks caused by the U.S.-Israeli war on Iran. These are the opinions of the columnist, an author for. You like this column? Check out Open Interest, your new essential source for global financial commentary. Follow ROI on LinkedIn, X and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets 7 days a weeks.
The paper trail that links a US fuel dealer to a Mexican cartel
According to Mexican sources who have direct knowledge of this matter, and four Mexican government documents, Ikon Midstream is being investigated in Mexico for fuel smuggling.
Documents and sources indicate that the probe is part and parcel of ongoing investigations on maritime shipments from the U.S. to Canada of petroleum products in an alleged scheme of evading a large tax due for these imports.
Ikon Midstream was allegedly one of the "central pieces," in a alleged scheme that involved one of Mexico's largest crime groups, Jalisco New Generation Cartel, or CJNG. According to a document, Mexico's Attorney General's Office?opened an investigation against the company based on "testimonies, documents, and surveillance."
The Attorney General's Office of Mexico did not respond to any requests for comments.
According to security sources and the document, the Texas trader’s export of Diesel aboard the tanker Torm Agnes, is being examined for possible cartel connections, as well as Ikon Midstream’s purported relationship with an alleged CJNG related trucking company who helped offload cargo from the vessel in the ports Ensenada, and Guaymas.
According to the U.S. Government, smuggled fuels and stolen crude oils are now the second largest source of revenue behind narcotics for Mexico's cartels.
Two documents described the alleged racket and its players. Ikon Midstream, for example, was accused of being a supplier in Mexico of petroleum products, which were allegedly moved through an intricate web of importers and distributors, as well as transporters and facilitators. The summaries for the other two documents were included. The security sources confirmed that the four documents were produced in March and April.
Rhett Knagy, Ikon Midstream's Executive Director, responded in an email on May 12 that "not one shred of evidence" could be found to support the allegations. The company would not respond to hearsay accusations.
Homeland Security Investigations (HSI), the U.S. Department of Homeland Security's primary transnational investigation agency, executed a criminal warrant at Ikon Midstream Houston offices on 14 April, a DHS spokeswoman said in a statement released April 17. The statement stated that the search warrant was part of an ongoing criminal investigation. DHS didn't elaborate and did not say if it was working with Mexican authorities.
Ikon Midstream repeatedly denies wrongdoing. Ikon Midstream, in a statement dated April 24, said that it has never provided and does not provide material support or resources for CJNG.
Mexican authorities announced that at least 16 arrests have been made since September, in relation to fuel smuggling. Officials have claimed to have uncovered "a criminal structure" behind alleged illicit activities, but have not publicly identified the detainees.
In an October report, detailed how diesel exported by Ikon Midstream on the tanker Torm Agnes found its way to Intanza, the Mexican company authorities suspect of being a front for CJNG. Intanza does not have a listed phone number, a website, a social media presence, or a physical address that authorities could locate.
This story detailed how Mexican cartels make billions each year by smuggling fuel - mainly from the U.S. - to Mexico. It's a huge tax dodge. Diesel, gasoline, and naphtha, are declared as lubricants in trade documents to avoid a high import duty charged by Mexico on these imported fuels.
According to the U.S. Government, smuggled fuels and stolen crude oils have become Mexico's cartels' second largest source of revenue behind narcotics. The government has intensified efforts to crackdown on this illicit trade. In February 2025, the Trump administration designated CJNG a terrorist organization.
Trade experts, tax officials and law enforcement officials have reported that the paperwork used for import-export transactions is often incomplete, or even faked, by smugglers. They use front companies and established players in the oil industry to help facilitate these deals, with some colluding and others unknowingly, while others are acting without their knowledge.
Ikon Midstream filed a defamation suit on November 14, in a Texas district court, claiming that the news agency had made "categorically untrue" statements in the article from October about its business. The news agency stands by its reporting, and it is fighting the lawsuit.
Ikon Midstream has said that it did not do business with Intanza. Ikon Midstream released internal documents after the publication of the 'October report. These showed that the Torm Agnes cargo, along with three other 2025 shipments containing diesel and naphtha on the tanker TormLouise?were sold by Ikon Midstream to a Mexican client named Azteca Cone.
Azteca Cone is also under investigation, along with Intanza, for suspected fuel smuggling, and possible links to CJNG. This is according to three Mexican security sources, and two government security documents.
Azteca Cone is a mystery in the fuel business. Azteca Cone, like Intanza has no phone number, web address or physical location.
Ikon Midstream's internal documents, which it shared with us, also showed that Ikon Midstream had incorrectly classified the cargo in at least four of its shipments to the United States last year. Ikon Midstream had some of its own documents that described the cargo as being lubricants. This contradicted statements made last year by both the Texas company's attorney and the commercial manager for the tankers who said the vessels were carrying diesel and naphtha. It is important to make this distinction because fuels imported from Mexico are taxed heavily.
According to law enforcement officials, smuggling can be difficult to detect when mislabeled records are matched with what is declared by the recipient country. For example, both parties declare cargo as lubricants, but the product in question is actually diesel.
Ikon Midstream, in its statement of April 24, acknowledged that it made mistakes in its export filings. This was a reversal from earlier statements by the company claiming that it used the correct product code in its declarations to U.S. Customs. The company's updated statement characterized the repeated inaccuracies of its paperwork as "clerical mistakes" and stated that there was "no intention to avoid duty."
The story was not commented on by the oil shipping giant Torm. It is responsible for managing the tankers Torm Agnes, and Torm Louise. Torm, a Danish company, said last year it ended its business with Ikon Midstream based on "what has been revealed." However, the company did not provide any further details.
Four sources familiar with this deal have confirmed that Imperial Oil is the Canadian oil company which owns the majority of Exxon Mobil.
Documents shared by Ikon Midstream show that Exxon was also listed on the inspection reports for three Torm Louise shipments. This indicates that the oil giant provided the fuel to Ikon Midstream. On inspection certificates, the parties listed are usually the buyer and seller as well as terminal operators.
Exxon has not responded to numerous requests for comments. A person with knowledge of the matter stated that Exxon cut ties with Ikon Midstream by mid-2025.
Ikon Midstream purchased 120,000 barrels last year, which were loaded on the Torm Agnes tanker in Canada and transported to Mexico. Intanza received it. Port records show that the cargo was declared twice to Mexican customs, first at the Port of Ensenada where a portion of it was loaded into fuel trucks and then in the Port of Guaymas where the remainder was discharged in the same manner.
This misclassification enabled Intanza avoid paying around $7 million of tax on diesel. The tax was calculated based on volume and tax rate.
Mexican security sources said that Mefra Fletes, a trucking firm in Mexico, helped remove the Torm Agnes Diesel from both ports. According to four documents from the government, the company was also identified as a central piece in the alleged fuel-smuggling plot.
According to two security documents and three Mexican sources of security, Mefra Fletes has worked closely with Ikon Midstream in the past, transferring petroleum products from tanker to truck at several Mexican ports. In August, a reporter stopped at the Houston offices of Ikon Midstream and was turned away by an employee who claimed to be from Ikon Midstream. He had previously worked for Mefra Fletes. The man refused to reveal his full name.
Five owners or representatives of Mefra Fletes were named in a fifth, undated, Mexican government security document. The document was partially viewed. It also alleged that the five had ties to CJNG. It was not possible to determine if any of these people had been charged or to reach Mefra FLetes. The company does not have a presence on social media, nor a listed phone number or an address.
Ikon Midstream has not answered any questions regarding its purported relationship to Mefra Flates.
The FUEL TRADER'S VANISHING Clients
Ikon Midstream, in its lawsuit against a Mexican company, claimed to be an exporter and that it is solely responsible for the declarations made at Mexican customs.
Eight legal experts were consulted to determine what U.S. exporters should do to ensure that their customers are not sanctioned and are not connected to sanctioned parties. Ephraim Wernick is a Vinson & Elkins partner and former U.S. Department of Justice prosecution who specializes in foreign corruption and anti-money laundering cases. He says that such vigilance will be critical once CJNG, five other Mexican cartels, and the United States list of designated terrorist organizations are updated in February 2025. He said that U.S. prosecutors have greater leeway in pursuing parties suspected of giving cartels material support.
Wernick said, "You can't bury your head in the ground." He noted that he was unfamiliar with Ikon Midstream and its transactions in Mexico.
Ikon Midstream, in a statement dated April 24, said that it screens customers with a "risk based due diligence program." The company said that it has never transacted with an entity on the U.S. sanction list and that no counterparty had displayed "payment behaviour inconsistent with that of a legitimate wholesale purchaser."
Azteca Cone's physical address and even the most basic of information was not available.
Two journalists visited an industrial area on the outskirts Monterrey, in northern Mexico, in November using an Azteca Cone address listed on four invoices for 2025 provided by Ikon. This location was the home of a metalworking firm called C.W. Tech. C.W. Tech has been located at this address for three years.
C.W. Tech has not responded to any requests for comments. No indications exist that the company is involved in this alleged fuel smuggling scam.
According to an analysis of permits issued since 2021 or 2022, Azteca Cone and Intanza have never held the permits required by Mexico’s Energy Ministry for the importation of diesel or naphtha to Mexico. Two Mexican attorneys who specialize in energy and tax issues said that importers without these permits could face heavy fines or even prison time.
The Energy Ministry has not responded to any requests for comments.
Ikon Midstream stated that it was not responsible for verifying Azteca Cone's physical presence, nor did it have any obligation under U.S. law or Mexican law, to verify if its Mexican client held these permits. This statement, dated April 1, said.
Azteca Cone, as well as Intanza, have also had an important government approval revoked. In order to import any goods into Mexico, each company must be registered with the SAT (the nation's tax authority). According to the official list of suspended firms, Intanza as well as Azteca Cone, were both suspended from SAT's importers' registry on March 31, 2025. These suspensions were made less than one month after Torm AGNES arrived at the Mexican port of Ensenada in March 2025.
According to the list of suspensions, Intanza? and Azteca Cone lost their import authorizations due to their connection with another party who had been banned from importing. The document didn't name the third-party or explain why they were suspended.
The Mexican tax authority has not responded to any requests for comments.
Ikon Midstream stated in a statement dated April 1, that "it cannot be held responsible for any regulatory actions taken after the fact against a client."
Altana, a trade analytics firm in Mexico, reported that in addition to Azteca Cone, Intanza and other Mexican companies, thirteen others declared doing business with Ikon Midstream from October 11, 2019 to May 4, 2025. They imported products such as lubricants, fuel trucks, but no diesel, gasoline, or naphtha. Mexico's tax agency also suspended ten of these companies from the import registry - seven in 2025, according to its list of suspensions.
This list gave a number of reasons why these suspensions occurred: some of the companies were not able to be located by tax authorities. Others didn't file tax returns. Some didn't have all the documentation required to justify their foreign transactions. These cases were not detailed in the suspension list; tax authorities do not make details public.
SAT has not responded to any requests for comments about the suspension of Azteca Cone or Intanza, nor did it respond to questions regarding its suspensions. In a public document published by the tax authority in 2026, SAT said that it suspects that one of these firms - Komercialis – is a phantom firm that issued fake bills for transactions that did not take place.
No one responded to the requests for comments. The majority of companies did not have a listed phone number, or an internet presence. Many questions sent via courier were not delivered because the listed addresses of most companies could not be located.
Ikon Midstream stated that all of its counterparties had a business address at the time they transacted with it, in a statement dated April 24, 2004.
"IF NOTHING, THIS IS SUSPICIOUS"
The World Customs Organization developed product codes to standardize the way countries identify and track goods that enter or leave their borders. These codes are called Harmonized Tariff Scheduling (HTS) in the U.S.
The system is easy for smugglers to abuse, despite its precision. Customs officials cannot inspect each shipment to verify that the codes on the trade paperwork match the goods. Trade experts and authorities say that smugglers who want to avoid Mexican import duties for fuel often code their cargo as lubricants, or another type of petroleum product which is exempt from levy.
Ikon Midstream reported that it used Torm tankers for at least five shipments to Mexico of petroleum products. Both companies said that the cargoes they delivered were naphtha and diesel. The export documentation that the fuel trader provided for four of these shipments revealed that Ikon Midstream had used HTS codes to identify lubricants.
Two bills of lading were issued, one on January 7, 2025 and the other on January 24, 2025 for shipments departing Texas aboard the vessel Torm Louise. Both bills of lading had the HTS code for both cargoes, 2710.19.3020. According to the description of this code in the online database of HTS Codes by the U.S. Government, the number represents lubricating oil used in marine, automotive or diesel engines. Written descriptions on the bills of lading also described the cargo as being lubricating oil.
Ikon Midstream provided U.S. Export Documents for two additional shipments - a cargo containing diesel and naphtha that was sent aboard the Torm Louise in February and March of last year and diesel aboard the Torm Agnes. Both shipments used HTS codes as lubricants.
Ikon Midstream lawyer stated in an email dated October 29, that it was appropriate to use 2710.19.3020 because "it is a general product category and not a specific cargo listing."
The U.S. Government disagreed with this interpretation. U.S. Customs and Border Protection declined to comment on specific companies, investigations or reports. However, it did say that 2710.19.3020 was not the correct code for naphtha or diesel.
It is possible to make occasional mistakes on documents relating to international trade due clerical error, misunderstandings or a language barrier. CBP spokesperson stated that repeated inaccuracies could be considered as a violation of the foreign trade regulations.
CBP takes repeated errors in HTS code seriously, both for imports and exports. CBP may take enforcement and compliance actions including seizures, penalties, and increased scrutiny.
James Swanson is a former director of cargo security and controls for CBP. He said that Ikon Midstream repeatedly used incorrect HTS codes in U.S. Export paperwork. This was especially alarming to him because the Mexican importer had made the same error on their customs filings. He said it was hard to believe that this was an accident. This is at least suspicious.
Ikon Midstream, when presented with CBP's position regarding the product codes, admitted that it made mistakes in its export filings. It described the errors as minor and unintentional and stated in its statement on April 24 to the news agency that it was "committed" to accurately classifying products going forward.
Speaking generally about fuel smuggling and the use of false tariff codes, a former investigator for Mexico's tax authorities said that smugglers are now coordinating both ends of the transaction, using the same fake tariff codes in Mexico and the U.S. to make it harder for law enforcement officials to detect their deception.
Former investigators said that such subterfuge was "the most sophisticated and complex we've ever seen." It requires both importers and exporters to work together, as well as a good deal of technical expertise and a solid strategic plan.
Ikon Midstream stated in its statement of April 1, "There was no coordination between Ikon Midstream, Azteca Cone and tariff codes"
(source: Reuters)