US Escalates Sanctions Against Iran, Targeting Oil Transportation Network; Third-Party Cooperating Countries Face Collateral Risks

On April 15 local time, the U.S. Department of the Treasury officially announced the launch of a new round of sanctions on Iran's oil transportation infrastructure, adding more than 20 associated entities, individuals and ships to the sanctions list, involving multiple countries including the United Arab Emirates (UAE), India, and the Marshall Islands. This move marks that while strengthening the maritime blockade against Iran, the United States has further escalated its economic pressure. U.S. Treasury Secretary Janet Yellen even issued a tough warning, stating that secondary sanctions will be imposed on countries with commercial ties to Iran, and their effectiveness is comparable to a "military bombing".

According to an announcement released by the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury on the same day, the new sanctions focus on Iran's oil sales network and also cover associated forces of Iran in the Middle East such as Hezbollah in Lebanon, which is an important part of the Trump administration's maximum economic pressure on Iran and its regional associated forces. The announcement made it clear that all property and property interests of the newly sanctioned targets within the United States or controlled by U.S. persons will be fully frozen, and the relevant entities must take the initiative to report to OFAC.

The impact of this round of sanctions far exceeds Iran's borders. Entities or individuals from multiple countries that have oil trade or shipping links with Iran, including the UAE, the Marshall Islands, and India, have been included in the sanctions list. The announcement further clarified that associated entities controlled by the sanctioned targets will also have their relevant assets frozen simultaneously; unless explicitly authorized or exempted by OFAC, no U.S. person or entity within the United States may conduct any transactions with the sanctioned targets, and violators will face civil or criminal penalties.

Although the current U.S.-Iran conflict is in a temporary ceasefire, the diplomatic game between the two sides and the contest for control of the Strait of Hormuz have not stopped, and the direction of the situation remains full of uncertainty. Analysts believe that the United States' choice to escalate financial sanctions at this time is mainly aimed at cutting off Iran's economic lifeline of oil exports, further compressing Iran's living space, and forcing Iran to make concessions at the negotiating table. It is reported that the U.S. military launched a blockade of the Strait of Hormuz on April 13, and as of the 15th, it has stopped 9 Iran-related oil tankers from passing through the strait. However, Iran is opening up "secret navigation routes" through maritime storage, transshipment and other methods in an attempt to break the blockade.

Yellen further released a tough signal at a White House briefing on April 15, clearly stating that the United States will increase economic pressure on Iran, focusing on imposing secondary sanctions on third-party countries that have commercial ties with personnel, enterprises and ships under Iranian control. "We have clearly informed all countries and enterprises that as long as they purchase Iranian oil or allow Iranian funds to be deposited in their bank accounts, they will face secondary sanctions. The severity of this measure is equivalent to a military bombing at the economic level," Yellen said.

It is worth noting that one day before this briefing, the U.S. Department of the Treasury had sent warning letters to financial institutions in countries such as the UAE and Oman, explicitly threatening to impose secondary sanctions on institutions that maintain business ties with Iran. According to sources, there had been voices within the Trump administration proposing to strengthen financial sanctions to break Iran's expectation of "being able to get through the difficult period" and promote it to return to the negotiating table; in addition, Iran's charitable trust funds have also been listed as potential targets by some officials.

Despite the tough stance of the United States, the actual effectiveness of this series of financial pressure measures has been widely questioned. Elizabeth Warren, a Democratic senator from Massachusetts and the chief Democratic member of the Senate Committee on Banking, Housing, and Urban Affairs, pointed out that the soaring oil prices caused by the blockade of the Strait of Hormuz have brought unexpected economic gains to Iran, and any new economic sanctions will be offset by these gains. "What Secretary Yellen is doing now is essentially cleaning up the mess left by Trump's launch of this war," Warren said bluntly.

Daniel Picard, a trade affairs lawyer, also said that many countries have publicly opposed the U.S.-Iran conflict, and the United States' implementation of secondary sanctions is likely to trigger "diplomatic and economic backlash" from its allies. The industry generally believes that the effectiveness of economic sanctions relies on extensive international participation, and the United States' unilateral pressure will not only be difficult to achieve the expected results, but may also further weaken its own international credibility.

In addition to Democratic senators and industry experts, some Republican senators have also questioned the effectiveness of the new sanctions. Mike Rounds, a Republican senator from South Dakota and a member of the Senate Committee on Banking, Housing, and Urban Affairs, said that the United States has already imposed a number of severe sanctions on Iran, and the additional sanctions this time may not achieve the expected goals. "Personally, I am not optimistic that we can really solve the Iran problem without promoting regime change," Rounds said.

Experts analyze that after long-term sanctions, Iran has formed strong economic resilience. It has not only established a relatively complete internal circulation economic system, basically achieved de-dollarization in oil trade, but also diluted trade sensitive information through a multi-level isolation system. All these will weaken the actual effect of U.S. sanctions. At the same time, the global deterrence of U.S. unilateral sanctions is declining, and more and more countries have begun to introduce anti-sanction bills to reject U.S. "long-arm jurisdiction".

At present, the temporary ceasefire between the United States and Iran is about to expire. Although third parties such as Pakistan are actively mediating to promote the two sides to restart negotiations, there are still serious differences between the two sides on core issues such as the nuclear issue, ballistic missiles, sanctions relief, and control of the Strait of Hormuz, and the prospect of reaching a comprehensive agreement remains bleak. The United States' escalation of sanctions against Iran this time will undoubtedly further exacerbate regional tensions and bring more uncertainties to the global energy market and geopolitical pattern.

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