US Weighs 18th-Century Maritime Law to Seize and Liquidate Iranian Oil

The US Justice Department and the Pentagon are preparing to invoke 18th-century prize law to seize and sell Iranian oil and vessels captured under the current blockade. This dormant legal mechanism, largely unused since World War II, would allow federal courts to declare captured cargo as lawful property of the United States.

Washington is pursuing this unconventional route to bypass the slow and complex civil forfeiture process. Civil cases frequently stall when shipping companies, creditors, or other stakeholders assert competing financial claims to the seized assets.

A prize proceeding could streamline these disputes, enabling the faster liquidation of captured oil with proceeds directed to the US Treasury. Houston is emerging as the primary venue for these cases, leveraging the Southern District of Texas’s jurisdiction over major ports and its extensive petrochemical storage infrastructure.

US Attorney Aaron Reitz confirmed that the department is actively reviving these proceedings, characterizing the move as a return to an ancient body of maritime law. US forces have already intercepted Iranian-linked vessels since the blockade was imposed in April.

Beyond generating direct revenue, the strategy serves a broader geopolitical function for market participants. Reviving prize law signals that the US views the blockade as a formal wartime measure, potentially deterring neutral commercial vessels from transporting goods that support Iran.

For global energy and shipping markets, this legal shift introduces new layers of risk. The ambiguity surrounding these seizures may increase insurance premiums and compliance costs for neutral operators navigating the region, even as the accelerated liquidation of seized crude could introduce unexpected, though likely limited, supply volumes.

However, applying a centuries-old framework to modern conflicts presents substantial legal hurdles. Maritime attorney Allison Luzwick noted that this is a historical area of law untested in modern times, raising questions about whether current hostilities provide sufficient legal grounds without explicit congressional authorization.

Federal judges, prosecutors, and the Navy lack contemporary experience in administering prize cases, meaning procedures must be rebuilt from scratch. Critics also warn that normalizing this practice could set a dangerous precedent that rival powers, such as China, might exploit to justify seizing American or neutral merchant vessels in future conflicts.