US Expands Sanctions on Iran’s ‘Ghost Fleet’ of Oil Tankers

By Timothy Gardner

WASHINGTON – The United States has broadened its sanctions against Iran’s petroleum and petrochemical sectors in reaction to an Iranian missile attack on Israel, as announced by President Joe Biden’s administration.

This latest U.S. action incorporates petroleum and petrochemicals into an executive order aimed at critical sectors of Iran’s economy. The goal is to restrict funding for Iran’s nuclear and missile programs.

Jake Sullivan, the national security adviser, stated that the new designations will also target the so-called ‘Ghost Fleet,’ which transports Iran’s illicit oil to global buyers. "These measures will help further deny Iran financial resources used to support its missile programs and provide support for terrorist groups that threaten the United States, its allies, and partners," Sullivan said.

Israel has committed to retaliating against Iran’s missile strike on October 1, which was perceived as a response to Israeli military actions in Lebanon and Gaza, as well as the elimination of a Hamas leader in Iran.

The U.S. Treasury has declared that it can now impose sanctions on individuals involved in Iran’s petroleum and petrochemical sectors. Biden has advocated for Israel to consider alternatives to attacking Iran’s oil fields, especially as Gulf states express concerns over possible reprisals against their own facilities from Iranian proxies if the conflict escalates.

Additionally, the Treasury Department has designated 16 entities and identified 17 vessels as blocked property due to their involvement in the transportation of petroleum and petrochemical products supporting the National Iranian Oil Company.

Simultaneously, the State Department is working to disrupt funding related to Iran’s weapons programs and its support for "terrorist proxies and partners." It has imposed sanctions on six entities engaged in Tehran’s petroleum trade and identified an additional six ships as blocked property.

Under Biden’s leadership, Iran’s oil exports have reportedly increased as the country has managed to circumvent sanctions, with China emerging as its primary buyer.

The Eurasia Group consultancy noted that the U.S. could potentially reduce Iran’s oil exports by implementing stricter enforcement of existing sanctions, which may include satellite monitoring of tankers that have switched off their transponders. It also suggested that the U.S. could exert pressure on countries like Malaysia, Singapore, and the United Arab Emirates to support enforcement efforts. However, this would require significant diplomatic maneuvering, particularly with Malaysia and the UAE, who are hesitant to take steps favoring Israel. Enhanced enforcement of sanctions could necessitate targeting Chinese companies involved in shipping Iranian crude, given that China accounts for nearly 90% of Iran’s crude oil exports.