On February 6, the Department of the Treasury unleashed the first wave of the new Trump administration’s economic sanctions using the tried-and-true U.S. Government/Treasury Department mechanism instead of the recently over-utilized issuance of Executive Orders, although those will still be part of Trump’s anti-Iran toolkit. These new Treasury Department Office of Foreign Assets Control (OFAC) administered sanctions target an international network and shadow fleet used for facilitating the shipment of millions of barrels of Iranian crude oil worth hundreds of millions of dollars to the People’s Republic of China (PRC), the same transport system (but different companies and ships) also targeted by the Biden administration.
It appears that at least for now, the Treasury Department’s core functions regarding banking, trade finance and sanctions are safe from the Department of Government Efficiency (DOGE) “reformers.”
With the new measures, OFAC sanctioned more than dozen people and companies in China, India and the United Arab Emirates. The new targets include Iranian and Indian citizens, crew management firms and a collection of ships, similar to what was done in earlier Iran oil trade sanctions.
The oil in question was shipped on behalf of Iran’s Armed Forces General Staff (AFGS) and its sanctioned front company, Sepehr Energy Jahan Nama Pars (Sepehr Energy). According to OFAC, Iran generates the equivalent of billions of dollars each year via oil sales to fund its destabilizing regional activities and support of multiple regional terrorist groups, including Hamas, the Houthis, and Hezbollah. The AFGS utilizes networks of foreign-based front companies and brokers to enable these oil sales and shipments.
“The Iranian regime remains focused on leveraging its oil revenues to fund the development of its nuclear program, to produce its deadly ballistic missiles and unmanned aerial vehicles, and to support its regional terrorist proxy groups,” stated incoming Secretary Treasury Scott Bessent. “The United States is committed to aggressively targeting any attempt by Iran to secure funding for these malign activities.”
Iran is already selling most of its oil at a heavy discount, especially to China. The question remains however whether sanctions can ever reduce Iranian oil exports to zero, a sometimes stated U.S. goal.
President Donald Trump, while signing documents on February 4 mandating the U.S. Government to impose maximum pressure on Tehran, told assembled reporters that “we will see whether or not we can arrange or work out a deal with Iran.” Trump further explained “We don’t want to be tough on Iran. We don’t want to be tough on anybody, but they just can’t have a nuclear bomb.” Ominously, Trump added that he had given his advisers instructions to obliterate Iran if it assassinates him.
The February 6 actions were taken pursuant to the counterterrorism authority Executive Order (E.O.) 13224, as amended by E.O. 13886 (“E.O. 13224, as amended”), and E.O. 13902, which provides authority to the Secretary of the Treasury, in consultation with the Secretary of State, to identify and impose sanctions on key sectors of Iran’s economy. The actions are consistent with the President’s February 4, 2025, National Security Presidential Memorandum (see above) directing the Treasury Department and other U.S. Government agencies to enact maximum economic pressure on Iran in order to deny all paths to a nuclear weapon and counter Iran’s malign influence.
Sanctions Obligations and Legal Restrictions
As a result of the February 6 sanctions, all property and interests in property of these individuals and entities named by OFAC, and of any entities that are owned, directly or indirectly, 50 percent or more by them, individually, or with other blocked persons, that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. OFAC’s regulations generally prohibit all dealings by U.S. persons or within the United States (including transactions transiting the United States) that involve any property or interests in property of designated or blocked persons. U.S. persons must comply with OFAC regulations, including all U.S. citizens and permanent resident aliens regardless of where they are located, all persons within the United States, and all U.S.-incorporated entities and their foreign branches.
It is important to note that non-U.S. persons are also subject to certain OFAC prohibitions. For example, non-U.S. persons are prohibited from causing or conspiring to cause U.S. persons to wittingly or unwittingly violate U.S. sanctions, as well as engaging in conduct that evades U.S. sanctions. Violations of OFAC regulations may result in civil or criminal penalties. OFAC may impose civil penalties for sanctions violations based on strict liability, meaning that a person subject to U.S. jurisdiction may be held civilly liable even if such person did not know or have reason to know that it was engaging in a transaction that was prohibited under sanctions laws and regulations administered by OFAC.
