US Treasury Sanctions International Network Shipping Iranian Oil to China

An aerial view shows a crude oil tanker at an oil terminal off Waidiao island in Zhoushan, Zhejiang Province, China, on Jan. 4, 2023. China Daily via Reuters

The U.S. Treasury Department has imposed financial sanctions on an international network accused of shipping Iranian oil to China, officials said on Thursday.

The sanctions target entities and individuals in China, India, and the United Arab Emirates (UAE), as well as several oil tankers involved in the trade. The Treasury said the oil sales generate billions of dollars each year for Iran to build its military and support terrorist proxies such as Hamas, Hezbollah, and the Houthis.

The oil was shipped on behalf of Iran’s Armed Forces General Staff and a front company called Sepehr Energy. Treasury officials said Sepehr used deceptive tactics such as falsified maritime documents to conceal the oil’s Iranian origin before selling it to international buyers, including China.

According to Treasury Secretary Scott Bessent, Iran has been using its oil revenues to develop ballistic missiles, drones, and its nuclear program. A November 2024 report from the International Atomic Energy Agency indicated that Iran was expanding its stockpile of near-weapons-grade enriched uranium, apparently trying to build leverage before President Donald Trump’s return to the White House.

“The United States is committed to aggressively targeting any attempt by Iran to secure funding for these malign activities,” Bessent said in a statement announcing the sanctions.

Trump signed a memorandum on Feb. 4 reinstating the “maximum pressure” campaign against Iran. This strategy, first implemented during Trump’s first term, aims to block Iran’s access to nuclear weapons, curtail its ballistic missile program, and stop its support for terrorist groups.

To achieve these goals, the presidential memo specifically orders the Treasury and State departments to “drive Iran’s export of oil to zero, including exports of Iranian crude to the People’s Republic of China.”

The memo also directs the Treasury Department to prevent Iran from using Iraq’s financial system to evade sanctions and to ensure that Gulf countries do not become transshipment points for Iranian oil.

U.S. sanctions on Iran’s energy sector have been in place since Trump withdrew from the 2015 nuclear deal. He reimposed most of the economic restrictions in 2018. By the time Trump left office, Iranian oil sales had hit record lows due to a combination of U.S. sanctions and reduced global demand during the COVID-19 pandemic.

However, Iran’s oil exports have since rebounded, largely due to China’s increased appetite for Iranian crude. After Russia launched a full-scale war on Ukraine in 2022, China’s independent refineries shifted toward discounted Russian oil, prompting Iran to offer even steeper discounts to stay competitive in the Chinese market.

According to the most recent report by the U.S. Department of Energy, China took in nearly 90 percent of Iran’s crude oil and condensate exports in 2023—a dramatic rise from just 25 percent in 2017, the year before Trump reimposed sanctions. Other key buyers included Syria, the UAE, and Venezuela.

Speaking on Tuesday after meeting with Israeli Prime Minister Benjamin Netanyahu, Trump said he “hated” imposing the maximum pressure campaign during his first term as much as he does now and that he is open to negotiation if Iran gives up its nuclear ambitions.

“I say this to Iran, who’s listening very intently: I would love to be able to make a great deal. A deal where you can get on with your lives,” Trump said at the news conference, adding that he wants Iran to be “peaceful and successful.”

The president warned that it is “going to be very unfortunate” if Iran persists with its nuclear weapons program. However, he suggested that Iran could greatly benefit if it can convince him that it won’t develop a nuclear weapon.

If that were the case, Trump said, “I think they’re going to have an unbelievable future.”