Q&A: the new US sanctions on Iranian oil
Iran International
The United States imposed new sanctions last week on an international network accused of transferring Iranian oil to China, the first such measure under President Donald Trump’s so-called maximum pressure policy on Iran.
The US Treasury Department said the network has transported millions of barrels of Iranian crude oil, generating hundreds of millions of dollars used to fund Iran’s armed forces and Tehran's allies in the region.
Who is targeted by these sanctions?
The sanctions primarily target Sepehr Energy, a front company allegedly financing Iran’s General Staff of the Armed Forces, according to the Treasury.
A secret fleet of oil tankers and transport management firms involved in smuggling Iranian oil has also been blacklisted.
Sepehr Energy, established in 2010, has been linked to key figures in Iran’s petrochemical sector, with investments in methanol and ammonia plants.
Additionally, several individuals and three oil tankers registered under Panamanian and Hong Kong flags have been sanctioned.
Why now?
President Trump said during his campaign that he would resume his so-called maximum pressure policy against Iran once he's in office.
The main driver, as confirmed by the administration, is concern that Tehran might be closer than ever to a nuclear weapon.
“We will use all available tools to hold Iran accountable for its destabilizing activities and pursuit of nuclear weapons,” a Treasury spokesperson said.
The sanctions are enforced by the Departments of Treasury, State, and Justice. The Trump administration asserts that these steps are necessary to protect national security and that of its allies.
What do the sanctions aim to do?
The sanctions are structured around several coordinated measures, implemented by multiple US agencies:
- Reducing Iran’s oil exports to zero
The US aims to pressure Iran’s main oil buyers, particularly China, to halt purchases of Iranian crude, impacting Tehran’s foreign currency reserves. There may also be attempts, with US allies' help, to intercept and seize Iranian oil shipments on international routes.
- Revoking economic exemptions
Previously granted exemptions, such as those for Chabahar Port development projects, are now under review and likely to be canceled.
- Targeting the IRGC’s financial networks
The US will target accounts, shell companies and funding channels associated with the Islamic Revolutionary Guard Corps (IRGC).
- Seizing Iranian assets
Iranian government assets within the US and abroad, deemed by Washington to be involved in financing terrorism or evading sanctions, will be seized.
- Restricting technology and arms exports
Dual-use goods with both civilian and military applications will face tighter controls.
What else?
The US Department of Justice will prosecute individuals involved in espionage, cyber threats, and terrorism financing on behalf of Iran.
The Department of State will lead an international campaign to limit Iran’s influence in global organizations, pressure its allies and restrict travel by Iranian officials.
What would be the implications for Iran?
These sanctions could significantly reduce Iran’s oil revenues, deplete its foreign currency reserves, and trigger higher inflation and a decline in the rial’s value.
Seizing oil shipments may also disrupt Iran’s unofficial export channels.
As pressure mounts, Iran may reduce cooperation with the International Atomic Energy Agency (IAEA) or strengthen ties with countries such as China and Russia.
Given Iran’s regional influence, the sanctions could heighten tensions in the Persian Gulf, Red Sea and along the borders of Syria and Lebanon.
Iran may retaliate by ramping up uranium enrichment or boosting the capabilities of its regional allies.
What are the challenges in implementing the sanctions?
Despite the sanctions’ scope, implementation faces hurdles.
China may continue purchasing Iranian oil, while Iran’s extensive experience with informal financial networks could help it maintain some oil sales through intermediaries.
Economic pressure could provoke countermeasures from Iran, regionally or through its nuclear program.
Trump’s return to the maximum pressure strategy aims to curtail Iran’s influence, but its success depends on how serious the administration is in enforcing the measures and how cooperative other major international players are.
