Targeting Iran’s oil smuggling network that is reportedly in charge of sending billions of dollars’ worth of crude oil sales to China on behalf of Iran’s Armed Forces General Staff, the U.S. State Department announced new penalties on Tuesday. The plan, which is run through the front business Sepehr Energy Jahan Nama Pars, is charged with funding Iran’s nuclear aspirations, ballistic missile research, and network of proxy militias, including attacks on Israel and the U.S. Navy and Red Sea Houthi strikes.
According to the Department’s press release, “We will continue to use all the tools at our disposal to hold the regime accountable as long as Iran uses its illicit revenues to fund attacks on the United States and our allies, support terrorism worldwide, and pursue other destabilizing actions.”
The latest enforcement action under National Security Presidential Memorandum 2, a Trump-era policy that continues to direct a maximum-pressure strategy toward Iran, was carried out in accordance with Executive Order 13224 and its revisions. Only a few weeks have passed since the Treasury named Shandong Shengxing, a Chinese teapot refiner, for buying more than $1 billion worth of crude from a front connected to the IRGC-QF.
Tankers that swap flags, falsify manifests, and disappear from tracking systems are part of the shadow fleet that facilitates these trades and has come under increased scrutiny. However, the sheer amount of illegal flows has made it difficult for authorities to keep up. In March, Chinese purchases of Iranian crude reached a record 1.8 million barrels per day, helping to push total oil inflows to a 20-month high.
Although the goal of sanctions is to completely stop Iran’s oil earnings, the actual outcomes have been less clear. China seems more empowered than deterred, and Tehran keeps exporting, albeit at severe discounts. U.S. officials maintain, however, that it is still unacceptable to starve Iran’s military-industrial complex.
Market observers will be watching to see if the crackdown ultimately reduces volumes or merely adds another level of complexity to the most profitable game of nautical hide-and-seek in the world.
Meanwhile, India used to import around 9% of its crude oil from Iran before American stopped the waiver on India which allowed India to import crude oil from Iran. The escalation reached a boiling point when America put sanctions on four Indian companies for allegedly trading in Iranian Oil. But, India and Iran have both expressed willingness to reopen oil trade to diversify India’s trade basket.
