WPB: The United States has introduced new sanctions aimed at limiting the flow of Iranian oil to China. These penalties target a network of individuals and companies accused of facilitating the sale of millions of barrels of Iranian crude, as the Trump administration intensifies efforts to cut Iran’s oil exports to zero.
This latest round of sanctions serves as an initial warning to both Tehran and Beijing, signaling U.S. disapproval without completely shutting down diplomatic efforts to negotiate restrictions on Iran’s nuclear activities.
Experts suggest that while these measures—focused on individuals and ships linked to Iran’s covert oil transportation network—could have some impact, they are unlikely to eliminate Iranian oil exports entirely. Stronger actions, such as sanctioning Chinese banks that handle oil-related transactions, would be required to achieve that goal. However, such steps could heighten tensions between the United States and China, the world’s two largest economies.
Why Is Trump Targeting Iran?
Iran’s economy is heavily dependent on oil revenues, which, according to the U.S. State Department, finance armed groups that oppose American and Israeli interests.
The sanctions announced on February 6 affect more than a dozen entities and individuals in China, India, and the UAE, including Iranian and Indian nationals, crew management companies, and a fleet of oil tankers.
“These penalties, along with further measures that are likely to follow, will undoubtedly have consequences,” said Nader Itayim, an energy expert at the U.K.-based Argus Media. “The key question is how significant those consequences will be. That depends on how aggressively the Trump administration pursues Iran’s oil trade.”
Iran was allowed to sell oil under the 2015 nuclear deal, but when Trump pulled the U.S. out of the agreement in 2018, sanctions were reimposed, reducing Iran’s crude exports to about 400,000 barrels per day. However, through sanctions evasion tactics and rising Chinese demand, Iran managed to increase its sales, particularly as enforcement of sanctions became more relaxed under former President Joe Biden.
By reinstating the “maximum pressure” campaign that defined his first term, Trump aims to cripple Iran’s economy. He argues that Iran is dangerously close to acquiring nuclear weapons, while Tehran maintains that its nuclear program is peaceful.
“One of Trump’s objectives now is to financially weaken Iran,” said Tom Keatinge, director of the Center for Finance and Security at the Royal United Services Institute in London. “Since his last presidency, the international sanctions community has learned a lot about targeting a country’s oil revenue—particularly by studying how Russia has used a covert tanker fleet to bypass Western restrictions.”
How Does Iran’s ‘Shadow Fleet’ Operate?
A network of tankers, often referred to as Iran’s “shadow fleet,” plays a critical role in allowing the country to evade sanctions and secretly deliver oil to China and other destinations.
These operations rely on ship-to-ship transfers, third-party intermediaries, hidden financial transactions, and rebranding of oil cargoes to obscure their Iranian origin. These techniques enable Iran to continue exporting crude and generating revenue despite U.S. restrictions.
According to United Against Nuclear Iran, an organization that monitors Iran’s activities, the country shipped 587 million barrels of oil in 2024, with 91% of those exports ending up in China.
China, historically the largest importer of Iranian oil, officially halted its purchases in 2022 to avoid U.S. penalties, according to data from research firm Kpler. However, Iranian oil continues to reach China through indirect means facilitated by the shadow fleet.
What Comes Next?
U.S. officials are trying to further restrict Iran’s oil trade by urging China and other nations to stop dealing with Iranian crude and by penalizing ships suspected of transporting it.
The latest sanctions focused on vessels and shipping firms allegedly involved in moving Iranian oil. According to Keatinge, this reflects an evolving strategy by the U.S. and its allies, which has been refined through efforts to curb Russian oil shipments in recent years.
Future measures could extend beyond penalizing oil transport vessels. The U.S. might target companies that insure the ships, agencies that recruit crews, ports that receive the shipments, and even governments that register the tankers.
Itayim from Argus Media suggests that while such measures could deter more cautious Chinese buyers, they may not be enough to significantly disrupt the flow of Iranian oil. Stricter actions, such as pressuring Chinese ports, financial institutions, and intermediaries involved in the oil trade, would be required to reduce exports further.
However, escalating pressure on China could strain Washington’s already tense relationship with Beijing, especially after the two nations imposed new tariffs on each other on February 4.
Keatinge believes that limiting Iranian oil exports may become part of broader negotiations between Trump and Chinese President Xi Jinping. The recent sanctions, he argues, provide the U.S. with leverage over Iran without directly intensifying friction with China.
By WPB
Oil, Bitumen, Market, China
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