US Sanctions on Iranian Oil Network

US Sanctions on Iranian Oil Network

Why in News US Sanctions on Iranian Oil Network? 

Recently, the United States imposed new sanctions on an Iranian oil network. The move targets people and companies linked to oil shipments.  

• These sanctions were announced on July 30, 2025, and represent the largest Iran-related sanctions package since 2018. 
• The Department of the Treasury’s Office of Foreign Assets Control (OFAC) in the U.S targeted over 50 entities, individuals, and vessels. 
• These sanctions covered actors from multiple countries including India, the United Arab Emirates, Hong Kong, Turkey, Russia, and Iran.
• Total 6 Indian companies were restricted by US: Alchemical Solutions Private Limited, Global Industrial Chemicals Limited, Jupiter Dye Chem Private Limited, Ramniklal S Gosalia and Company, Persistent Petrochem Private Limited and Kanchan Polymers.

Why the United States Imposed New Sanctions on the Iranian Oil Network?

• To Disrupt Financial Support: The U.S. has expressed concern over Iran’s support to non-state groups operating in the Middle East. These include Hezbollah in Lebanon, Houthis in Yemen, and various militias in Iraq and Syria. According to American officials, Iran channels revenue from oil sales to fund the activities of these groups. These actors are often accused of fueling regional instability.  

• To Counter Iran’s Use of Deceptive Shipping: Iran has developed sophisticated networks to evade existing sanctions. These methods include using false documentation, renaming ships, and conducting ship-to-ship transfers. Such techniques make it difficult for global authorities to trace oil origins. The U.S. has accused Iran of using these tactics to secretly export millions of barrels of oil. 

• To Apply Maximum Economic Pressure: Since the withdrawal from the Iran nuclear deal in 2018, the U.S. has adopted a strategy of maximum pressure. This approach focuses on weakening Iran’s key economic sectors. The oil industry remains Iran’s largest source of foreign income. By targeting this sector repeatedly, the U.S. seeks to limit Iran’s financial capabilities. 

• To Prevent Nuclear Program: In recent years, Iran has increased its uranium enrichment levels beyond limits set by the 2015 nuclear deal. By 2023, the International Atomic Energy Agency (IAEA) confirmed that Iran enriched uranium up to 60% purity, dangerously close to weapons-grade level. The U.S. believes that restricting Iran’s oil income could pressure its leadership to return to nuclear talks.

Iranian Oil and Cargo Network: How It Operates

The Iranian oil trade continues through a shadow network that hides its true origins. This network includes tankers, front companies, and shell firms working across several countries. One such complex operation is linked to individuals like Mohammad Hossein Shamkhani, also known as Hossein. His network shows how Iran moves oil despite global sanctions.

• Fake Companies: The network uses fake business names and hidden ownership to operate freely. These companies register under different countries to avoid suspicion. Some of them list fake addresses or inactive office spaces. The group works with people and firms in UAE, Turkey, China, etc. 

• Cargo Ships: The group manages a large number of oil tankers. These vessels do not always report their real location. Many turn off tracking systems known as AIS (Automatic Identification System). When ships go dark, they often perform oil transfers at sea.

• Ship-to-Ship Transfers: The vessels conduct ship-to-ship transfers, especially in areas like the Gulf of Oman or South China Sea. In these cases, one ship carrying Iranian oil meets another ship mid-sea. The oil is transferred quietly without alerting authorities. The second ship then delivers the oil under a different name.

• False Cargo Papers: The network creates fake certificates to disguise the oil. These include bills of lading, customs forms, and ownership records. Buyers in countries like China receive these cargoes without knowing the full details. To avoid detection, the vessels often change names and national flags. 

Impact of these Sanctions

• Impact on Iran: The sanctions will reduce Iran’s ability to sell oil. The government will face more challenges in receiving payments from foreign buyers. Iran’s economy will struggle due to limited access to oil revenue. Inflation will rise if imports become harder to afford. The value of the Iranian rial will drop further due to lower foreign exchange reserves. Private industries connected to oil will lose contracts and workers may lose jobs.

• Impact on India: Indian firms involved in the network will face global scrutiny. They will risk being removed from international financial systems. Business with U.S.-linked partners will become more difficult for these firms. Government agencies will tighten their oversight of oil-related transactions. The sanctions will affect Indian oil refiners that once depended on Iranian crude. The sanctions will raise concerns for India’s regional energy strategy. Indian ports linked to sanctioned vessels will receive more international monitoring.

Also Read: US-Pakistan Oil Trade Deal