Posted on March 18, 2024
The US Department of Treasury Feb. 27 outlined a set of new sanctions targeting Iran’s support of Russia and the Houthi rebels, including new sanctions on two oil tankers that Treasury alleges have helped fund Iran’s military activities.
The measures are targeted to Iran’s involvement with regional terror groups and Russia’s military supply chains, said Rachel Ziemba, adjunct senior fellow at the Center for a New American Security. “They are yet to meaningfully increase pressure on Iranian fuel exports as a whole,” she said.
Brenda Shaffer, an energy expert at the US Naval Postgraduate School, also emphasized the limited scope of the sanctions. “It is lipstick on a pig. Iran is exporting oil without any sanctions impediments and delivering arms to several militias operating against the US and disrupting the global trade system,” she said.
While the sanctions are not expected to impact the global oil market broadly, it could put pressure on the shadow fleet and put more price leverage in China’s court, said Rachel Ziemba, adjunct senior fellow at the Center for a New American Security.
“I does not yet move the needle on a global scale, but the tendency is towards tighter market and more discounts on sanctioned trade,” Ziemba said. China so far has been wary of accepting fuel from specifically sanctioned vessels, she said.
Iranian crude production is higher than it has been in years, exceeding 3 million b/d since August 2023. But total Iranian crude oil and condensate loadings plunged to a 10-month low of 1.46 million b/d in January – a 430,000 b/d drop month-on-month, according to an S&P Global Commodities at Sea crude oil report.
The decline reflects in part a backup in shipments as Iran’s trade with China has slowed in recent months, according to the CAS report. “More cargoes had accumulated offshore Iran at the end of last year as Tehran withheld shipments to China, demanding higher prices,” the report said.
Sanctions eye Russian supplies
Treasury’s Office of Foreign Assets Control imposed sanctions on the Panama-flagged oil tanker Kohana, which has shipped more than $100 million in Iranian commodities to China on behalf of Iran’s Ministry of Defense and Armed Forces Logistics or MODAFL, according to a Feb. 27 OFAC statement.
The US is targeting MODAFL in part because it has been delivering weapons like unmanned aerial vehicles to Russia in support of its invasion of Ukraine and supplying weapons to militia groups attacking US forces in Iraq and Syria, the statement said.
“The US Treasury Department stands ready to disrupt any efforts by MODAFL to generate revenue to support these activities,” Brian Nelson, Treasury’s undersecretary for terrorism and financial intelligence, said in the statement.
At the same time, OFAC sanctioned the owner of the Kohana, Hong Kong-registered Kohana Company Limited, and the operator of the tanker, Marshall Islands-registered Iridescent Co Ltd., the statement said.
Houthi rebels also targeted
In a separate statement, OFAC announced sanctions on Mohammad Reza Falahzadeh, the deputy commander of Iran’s Islamic Revolutionary Guard Corps-Qods Force and a Houthi group member. OFAC also sanctioned the oil tanker Artura, and Hong Kong-based Cap Tees Shipping Co. Limited, which owns and operates the Artura, the statement said.
The Artura was used to sell Iranian commodities sold to support the Houthi rebels and the IRGC-QF, the statement said. “The revenue generated through these illicit networks enables the Houthis’ militant efforts, including numerous terrorist attacks in the region using advanced unmanned aerial vehicles and missiles,” the statement said.
The sanctions targeting the Houthi rebels was taken in coordination with the United Kingdom, Matthew Miller, spokesperson for the Department of State, said in a statement. “The United States and its allies remain committed to countering terrorist financing and will continue to use all available means to disrupt Houthi attacks on international shipping in the region,” Miller said.
