Latest Developments
False Shipping Manifests: Iranian oil tankers used forged Iraqi documents to smuggle oil, Iraqi Oil Minister Hayan Abdel-Ghani said in a news conference on March 24. Abdel-Ghani said that oil tankers detained by the U.S. Navy in the Persian Gulf were carrying Iraqi shipping manifests but that “it turned out these tankers were Iranian.” The same day, Iran’s oil ministry denied that their tankers had been seized by U.S. forces.
Iran-Backed Militias Central to Smuggling Network: Reuters reported in December that a sophisticated oil smuggling network in Iraq may generate more than $1 billion in annual revenues for Iran. The smuggling network’s methods include blending Iranian and Iraqi oil to sell as pure Iraqi oil on international markets or reselling oil heavily subsidized by the Iraqi government and intended for Iraqi industries. Iraq is reluctant to crack down on the smuggling, as its leaders, including current Prime Minister Mohammed Shia al-Sudani, rely heavily on support from Iran-backed Shia paramilitary groups that are central to the smuggling operations.
U.S. Silent on Vessel Seizures: On February 4, the Trump administration announced that it was restarting the “maximum pressure” sanctions regime against Iran, which includes additional sanctions targeting Iran’s illicit oil exports. On March 20, the Treasury Department sanctioned eight vessels that transport Iranian crude oil to “teapot” refineries in China. There has been no confirmation so far from the U.S. government that any vessels were seized.
FDD Expert Response
“Iraq serves as a crucial hub for Tehran’s illicit activities, including terrorism financing, sanctions evasion, re-export operations, and money laundering. Applying economic pressure on Baghdad to curb these operations is a step in the right direction. However, the effectiveness of such pressure has clear limits as long as Tehran-backed Shia militias maintain control over key levers of power within Iraq’s political and security institutions.” — Saeed Ghasseminejad, Senior Iran and Financial Economics Advisor
“Iran denies its tankers have been seized. What’s undeniable, however, is that pressure is mounting on Tehran and its enablers — including those in Baghdad. The Iraqis are trying to balance relations with Iran and the United States, but anything short of assisting with U.S. sanctions enforcement should be met with severe and sustained consequences.” — Max Meizlish, Senior Research Analyst
FDD Background and Analysis
“U.S. Levies Sanctions Against Chinese ‘Teapot’ Oil Refineries for Iranian Oil Purchases,” FDD Flash Brief
“Crushing Iran’s oil trade: The path to maximum pressure,” by Mark Dubowitz and Saeed Ghasseminejad
“U.S. Sanctions Should Target Tehran’s Top Economic Operatives,” by Saeed Ghasseminejad
“U.S. Should Impose Sanctions on Iran’s Nascent Lithium Industry,” by Saeed Ghasseminejad
Issues:
Gulf States Iran Iran Sanctions Sanctions and Illicit Finance