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U.S. Sanctions Intensify Pressure on Iran’s Shadow Fleet

The United States has intensified its maximum pressure campaign against Iran, targeting a vast network of vessels, brokers, and companies that facilitate the sale and transportation of Iranian oil. The latest round of sanctions imposed by the Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the U.S. Department of State aims to disrupt Iran’s so-called “shadow fleet,” which enables the country to continue its petroleum exports despite stringent restrictions. This move marks a significant escalation in Washington’s efforts to curb Iran’s access to financial resources used for destabilizing activities in the region.

Iran’s shadow fleet consists of dozens of vessels and intermediaries that employ deceptive shipping practices to bypass sanctions and deliver crude oil to international buyers. These strategies include ship-to-ship transfers in international waters, falsified documentation, and the use of shell companies to obscure ownership.

Among the key players sanctioned are oil brokers operating out of the United Arab Emirates (UAE) and Hong Kong, as well as tanker operators and managers based in India and the People’s Republic of China (PRC). These entities play a crucial role in facilitating Iran’s continued ability to export millions of barrels of crude oil, often valued in the hundreds of millions of dollars.

The Iranian National Oil Company (NIOC) and its subsidiary, the Iranian Oil Terminals Company (IOTC), have also been targeted in this latest wave of sanctions. These organizations are instrumental in directing Iran’s oil exports and ensuring that petroleum sales continue to finance Iran’s military and proxy forces, including the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF).

The Role of Oil Brokers in Sanctions Evasion

Oil brokers based outside Iran are essential to the country’s ability to circumvent international sanctions. These intermediaries secure deals for the sale and transport of Iranian crude oil, with the UAE and PRC serving as primary destinations.

One such entity, UAE-based Petroquimico FZE, has purchased tens of millions of dollars’ worth of Iranian petroleum products from NIOC. Petroquimico FZE was found using the Barbados-flagged CASINOVA (also known as YING GE) to transport over 200,000 barrels of Iranian oil to the UAE in late 2024. The vessel is managed and operated by Liberia-based Le Monde Marine Services Limited, which has now been sanctioned for its role in facilitating Iranian oil transactions.

Similarly, Hong Kong-based oil broker Petronix Energy Trading Limited has acquired hundreds of thousands of metric tons of Iranian oil from the sanctioned Naftiran Intertrade Company, NIOC’s marketing arm. The company relied on vessels such as the Panama-flagged MENG XIN and the Cook Islands-flagged PHOENIX I to transport oil to the PRC, both of which are now blocked properties under U.S. sanctions.

The Growing List of Sanctioned Vessels and Entities

Iran’s tanker operations depend heavily on ship-to-ship transfers that occur outside of jurisdictional port limits. These clandestine operations allow Iranian crude to reach foreign customers while obscuring its origin.

For example, the Panama-flagged URGANE I, managed and operated by PRC-based Nycity Shipmanagement Co Ltd, has been sanctioned after being caught transporting Iranian crude oil via ship-to-ship transfers. Another firm, India-based Flux Maritime LLP, has also been targeted for its role in managing tankers involved in similar activities.

Additional vessels, including LYDIA II, AYDEN, and FIONA, have also been implicated. These tankers, owned and operated by Seychelles-based shell companies, have transported multiple shipments of Iranian oil to PRC refineries. The companies responsible for these operations—Sunny Land Trading Ltd, Green Garden Trading Ltd, and Artemis Heart Ltd—are now facing U.S. sanctions.

Legal and Economic Ramifications of Sanctions

The new sanctions impose significant restrictions on the designated persons and entities. As a result:

All property and interests in property of the sanctioned individuals and companies within U.S. jurisdiction are now blocked.
Any entity owned 50% or more by one or more blocked persons is also subject to sanctions.
U.S. persons are generally prohibited from engaging in transactions involving designated persons or entities unless authorized by OFAC.

The penalties for violating these sanctions are severe, with potential civil and criminal consequences. OFAC’s enforcement guidelines emphasize that violations, even those committed inadvertently, can result in substantial fines and reputational damage for businesses and financial institutions worldwide.

The Future of U.S. Sanctions on Iran’s Oil Sector

The Biden administration has signaled that it will continue aggressively enforcing sanctions against Iran’s energy sector. These measures aim to cut off Iran’s ability to fund its military operations and proxy forces, further pressuring the regime to comply with international regulations.

Despite these efforts, Iran has demonstrated resilience in adapting to sanctions through increasingly sophisticated evasion tactics. The ongoing battle between U.S. authorities and Iran’s shadow fleet is expected to continue, with future sanctions likely targeting additional vessels, intermediaries, and financial networks involved in these illicit activities.

Conclusion: The Impact of Sanctions on Iran’s Economy and Global Oil Trade

The latest round of U.S. sanctions against Iran’s shadow fleet underscores Washington’s determination to dismantle Tehran’s illicit oil trade. These measures not only disrupt Iran’s financial channels but also send a strong message to companies and countries still engaging in Iranian oil transactions: compliance with sanctions is non-negotiable.

As Iran continues to seek ways to evade restrictions, the U.S. and its allies will need to remain vigilant, employing advanced tracking technologies and diplomatic pressure to ensure enforcement. The ultimate success of these efforts will depend on international cooperation and the ability to swiftly adapt to emerging sanction evasion tactics.