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The U.S. has imposed sanctions on individuals, companies, and vessels accused of disguising Iranian oil as Iraqi to bypass sanctions.
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Iraqi-British national Salim Ahmed Said and UAE-based VS Tankers were among the key targets for operating blending and transport operations.
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Additional sanctions targeted the so-called shadow fleet, including vessels and companies that facilitate covert Iranian oil shipments near Singapore.
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Analysts see the sanctions as a strategic signal, possibly tied to unresolved tensions between Baghdad and Erbil over Kurdish oil exports.
The United States imposed sanctions on July 3 targeting multiple entities involved in the Iranian oil trade, including a smuggling network operating between Iran and Iraq. This move marks a continuation of the previous U.S. administration’s pressure strategy, following heightened tensions stemming from the Israel-Iran conflict. Alongside the sanctions, Iran enacted a law on July 2 that ends its cooperation with the United Nations’ nuclear watchdog. These developments are expected to impact Iran’s crude exports significantly. Based on analysis by S&P Global Commodity Insights, Iranian oil exports could drop by 200,000 to 300,000 barrels per day in 2025 unless sanctions are eased. However, a new nuclear agreement might enable a recovery of 300,000 to 500,000 barrels per day within a few months, according to the same report published by S&P Global.
Sanctions Target Iranian Oil Smuggling Network
The U.S. Treasury’s Office of Foreign Assets Control (OFAC) has imposed new sanctions on individuals, companies, and vessels allegedly involved in a sophisticated oil smuggling scheme that disguises Iranian oil as Iraqi to evade sanctions. Among those sanctioned is Iraqi-British national Salim Ahmed Said, accused of orchestrating the operation through a web of companies and tankers that have been active since at least 2020. According to the Treasury, these entities blend Iranian and Iraqi oil, using forged documents to sell the mix to Western buyers under the false label of Iraqi origin.
Key targets of the sanctions include UAE-based VS Tankers, which reportedly moved Iranian oil through Iraqi infrastructure, and the VS Oil Terminal in Iraq, which operates six storage tanks used for mixing the oil. The crude oil tanker Dijilah, owned by VS Tankers, was also sanctioned, along with several affiliated businesses connected to Said.
Further actions targeted what the Treasury described as “shadow fleet” operations. Singapore-based Trans Arctic Global Marine Services was sanctioned for allegedly facilitating pilotage services for National Iranian Tanker Company vessels passing through the Strait of Malacca, enabling covert ship-to-ship transfers near Singapore. Several additional tankers—including Vizuri, Fotis, Themis, Bianca Joysel, Elizabet, Atila, and Gas Maryam—along with their owning companies, were also named in the sanctions. The U.S. State Department, in coordination with the Treasury Department, sanctioned six additional entities and four tankers involved in the Iranian petroleum trade.
Broader Signals Behind Sanctions
While the newly imposed U.S. sanctions include measures against a small oil terminal in Iraq, their impact on Iraq’s overall crude exports is expected to be minimal, according to a July 3 note from Rapidan Energy Group. The firm views the action more as a symbolic warning than a move with immediate commercial consequences. However, the timing of the sanctions may reflect broader geopolitical intentions, particularly about an ongoing oil dispute within Iraq.
Tensions between the federal government in Baghdad and the Kurdistan Regional Government (KRG) in Erbil have escalated over the control and marketing of Kurdish oil exports. The federal government has maintained that Iraq’s State Oil Marketing Organization (SOMO) holds exclusive rights to export the country’s crude. The sanctions announcement comes just days after talks between the KRG and Baghdad broke down, which Rapidan suggests may not be coincidental. The action may be interpreted as a subtle message to Baghdad amid its reluctance to resolve the long-standing disagreement over Kurdish oil flows.
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Source: S&P Global
