US sanctions entities facilitating Iranian oil trade, resuming pressure campaign

The US on July 3 sanctioned a range of entities for facilitating the Iranian oil trade, including an Iran-Iraq oil smuggling network, resuming US President Donald Trump's sanctions pressure campaign in the wake of the Israel-Iran conflict.

"As President Trump has made clear, Iran's behavior has left it decimated," Secretary of the Treasury Scott Bessent said in a July 3 statement. "While it has had every opportunity to choose peace, its leaders have chosen extremism."

Iran passed a law July 2 that ended its cooperation with the UN's nuclear watchdog.

Iranian exports are expected to fall 200,000 b/d-300,000 b/d this year from 1.6 million b/d in 2024 unless US sanctions are lifted, according to S&P Global Commodity Insights analyst Zhuwei Wang.

However, a nuclear deal could allow exports to increase by 300,000 b/d-500,000 b/d in a span of three to four months, according to Commodity Insights analyst Ian Stewart.

New sanctions

Treasury's Office of Foreign Assets Control sanctioned Iraqi-British national Salim Ahmed Said for allegedly using a network of companies to sell Iranian oil falsely declared as Iraqi oil since at least 2020, according to the statement.

Said's companies and tankers blend Iranian oil with Iraqi oil, which is then sold to Western buyers via Iraq or the UAE as Iraqi oil, using forged documentation to avoid sanctions, the Treasury statement alleged.

Treasury also sanctioned a number of companies and one tanker involved in the network.

OFAC sanctioned UAE-based VS Tankers, which transported Iranian oil via Iraqi pipelines to be blended and sold as Iraqi oil, the statement said. OFAC sanctioned VS Oil Terminal located in Iraq, which manages six oil storage tanks where Iranian oil is dropped off to be mixed with Iraqi oil, the statement said.

Treasury also sanctioned the crude oil tanker Dijilah, which is owned by VS Tankers, as well as batch of other businesses linked to Said and the network.

OFAC issued sanctions targeting shadow fleet actors, including Singapore-based Trans Arctic Global Marine Services. Treasury alleges the company arranged piloting services for National Iranian Tanker Company vessels going through the Strait of Malacca for eventual ship-to-ship transfers to vessels near Singapore.

Treasury also sanctioned the oil tankers Vizuri, Fotis, Themis, Bianca Joysel, Elizabet, Atila, Gas Maryam, as well the companies that own the tankers.

The State Department sanctioned six entities and four tankers for engaging in the trade of petroleum or petroleum products from Iran.

Sanctions implications

The sanctions on the Iraqi oil terminal are largely "a shot across the bow," Rapidan Energy Group said in a July 3 note. The terminal is small, and the sanctions pose little risk to disrupting Iraqi crude exports, the note said. But the sanctions may signal the administration's stance regarding an oil-related dispute there, the note said.

"US hawks have been threatening to sanction Iraq over Baghdad's intransigence on reaching a deal with Erbil to resume Kurdistan Regional Government crude exports, and the timing of today's sanctions ... suggests they are linked to the breakdown in talks between the KRG and Iraqi officials earlier this week."

Erbil and Baghdad have been at loggerheads over who controls the KRG's oil, with the federal government insisting that state oil marketer SOMO has the sole right to market all crude produced within the country.