In response to Iran’s recent attacks on Israel, the U.S. Department of the Treasury announced a significant expansion of sanctions on Iran’s petroleum and petrochemical sectors. The sanctions, announced on October 11, 2024, aim to limit Iran’s financial capabilities to fund destabilizing activities, including its nuclear program and support for terrorism.
Intensified Sanctions on Iran’s Energy Sector
The sanctions fall under Executive Order (E.O.) 13902, which allows the U.S. government to impose restrictions on critical sectors of the Iranian economy, particularly petroleum. This move is designed to block revenue streams Iran uses to fund missile development, nuclear activities, and regional terrorist proxies. According to U.S. Treasury Secretary Janet L. Yellen, these measures directly target Iran’s ability to use energy revenues for activities that destabilize the Middle East and threaten global security.
Targeting Iran’s Global Oil Network
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is also taking specific actions against entities involved in the transport of Iranian petroleum and petrochemical products. A total of 10 entities and 17 vessels have been designated as blocked property under E.O. 13846. These entities, which operate in multiple jurisdictions, facilitate the illegal export of Iranian oil, often through deceptive practices like falsifying cargo documents or conducting ship-to-ship transfers.
Key players include UAE-based Max Maritime Solutions and Hong Kong-based Cathay Harvest Marine Ltd, both of which have managed vessels that transported Iranian oil to China. These firms, along with others, have been identified for their direct involvement with the National Iranian Oil Company (NIOC) and its affiliates, such as Triliance Petrochemical Co. Limited, a major actor in moving Iranian oil to international markets.
The Iranian “Ghost Fleet”
A significant portion of these sanctions targets what is commonly referred to as Iran’s “ghost fleet”—a network of tankers and shipping operators that obscure the origin of Iranian oil. This fleet has been instrumental in helping Iran maintain oil exports despite international sanctions. Many of these tankers use deceptive tactics like turning off transponders and falsifying paperwork to hide the true nature of their cargo. OFAC has named several vessels, including the BENDIGO, CARNATIC, and SALVIA, as key players in this illicit trade, linking them to the transport of Iranian crude to refineries in the People’s Republic of China (PRC).
Global Impact of the New Sanctions
The new sanctions impose significant restrictions on both U.S. and non-U.S. entities. Foreign companies engaged in transactions with Iran’s energy sector may now find themselves subject to U.S. penalties if they continue their involvement. Furthermore, any foreign financial institution that knowingly facilitates significant transactions with the designated individuals or entities could face sanctions, including being cut off from the U.S. financial system.
These latest actions are in line with the Stop Harboring Iranian Petroleum Act (SHIP Act), which was enacted as part of the U.S. government’s efforts to curtail Iran’s oil trade and its ability to finance malign activities. The SHIP Act specifically targets foreign entities involved in the purchase, sale, or transport of Iranian petroleum.
