U.S. Escalates Pressure on Iran with Sanctions on Alleged Oil Smuggling Network Treasury Targets $300M Iran Oil Scheme, Seeks to Pressure Tehran
Washington: The United States today imposed sanctions on a network of companies and vessels led by Iraqi-Kittitian businessman Waleed al-Samarra’i, alleging it smuggles Iranian oil disguised as Iraqi oil to fund Iran’s destabilising activities across Iraq, the Middle East, and beyond. The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), in a press release titled “Treasury Intensifies Pressure on Iranian Oil Smuggling and Sanctions Evasion Schemes in Iraq,” claims the network generates approximately $300 million annually for Iran and its partners, though these allegations lack independent verification.
The Treasury’s use of “pressure” underscores its role in the U.S. “maximum pressure” campaign, a policy aimed at economically isolating Iran to force concessions on its nuclear program and regional influence. The strategy, formalised under National Security Presidential Memorandum-2, seeks to drive Iran’s oil exports to near-zero, denying funds for activities the U.S. deems destabilising. OFAC alleges that al-Samarra’i, a dual citizen of Iraq and St. Kitts & Nevis based in the United Arab Emirates (UAE), orchestrates a network that blends Iranian oil with Iraqi oil, marketing it as solely Iraqi to evade international sanctions. Operating primarily in the Arabian Gulf and Iraqi ports, the scheme is part of what the U.S. describes as an effort to counter Iran’s influence. “Iraq cannot become a safe haven for terrorists, which is why the United States is working to counter Iran’s influence in the country,” said Treasury Secretary Scott Bessent. “By targeting Iran’s oil revenue stream, Treasury will further degrade the regime’s ability to carry out attacks against the United States and its allies.”
Iran has not issued a specific response to these sanctions, but its reactions to similar U.S. measures suggest a likely stance of defiance. In July 2025, an Iranian foreign ministry spokesperson called comparable oil sanctions “a clear example of America’s hostility” aimed at harming Iran’s economic development and its people’s welfare. Iran typically frames such actions as unjust, rejecting smuggling allegations and emphasising resilience through evasion tactics like those described by the U.S., including ship-to-ship transfers and AIS spoofing. With China purchasing 90% of Iran’s crude oil exports, Tehran may downplay the sanctions’ impact while continuing to seek markets, potentially viewing them as a U.S. tactic to pressure concessions in nuclear talks or regional policy.
According to OFAC, al-Samarra’i operates through two UAE-based companies: Babylon Navigation DMCC, which manages logistics and shipping, and Galaxy Oil FZ LLC, the primary trader of the alleged smuggled oil on global markets. The network reportedly employs a fleet of Liberia-flagged vessels—ADENA, LILIANA, CAMILLA, DELFINA, BIANCA, ROBERTA, ALEXANDRA, BELLAGIO, and PAOLA—for ship-to-ship transfers to blend oils at sea and in Iraqi ports. To obscure ownership, al-Samarra’i allegedly uses Marshall Islands-based shell companies—Tryfo Navigation Inc., Keely Shiptrade Limited, Odiar Management S.A., Panarea Marine S.A., and Topsail Shipholding Inc.—as registered owners of these vessels, further concealing his control.
The U.S. claims the network employs deceptive tactics, including unsafe nighttime ship-to-ship transfers with U.S.-sanctioned vessels from Iran’s shadow fleet, Automated Identification System (AIS) spoofing, and conspicuous gaps in AIS location reporting, to hide ties to Iran’s petroleum sector, targeted under Executive Order (E.O.) 13902. This action follows OFAC’s July 3, 2025, sanctions against a similar network led by Salim Ahmed Said, also accused of smuggling blended Iraqi and Iranian oil, reflecting a consistent U.S. strategy to disrupt Iran’s alleged sanctions evasion.
Al-Samarra’i, Babylon, and the shell companies are designated under E.O. 13902 for allegedly operating in Iran’s petroleum sector or acting for designated entities. Galaxy Oil is sanctioned for being owned or controlled by al-Samarra’i, and the nine vessels are identified as property in which Babylon has an interest. The sanctions block all property of designated persons and entities in the United States or under U.S. control, requiring reporting to OFAC. Entities owned 50 per cent or more by blocked persons are also blocked. U.S. persons are prohibited from transactions with these parties unless authorised by OFAC, with violations risking civil or criminal penalties. Foreign financial institutions engaging with the network may face secondary sanctions, including restrictions on U.S. correspondent or payable-through accounts.
Bessent reiterated the U.S. commitment to “an oil supply free from Iran” and ongoing efforts to disrupt Tehran’s sanctions evasion. The Treasury’s emphasis on intensifying pressure highlights the sanctions’ aim to weaken Iran’s economic and regional influence, potentially pushing Tehran toward diplomatic concessions. However, without independent corroboration of the smuggling allegations, the measures raise questions about their impact on Iraq’s economy, where oil is a lifeline for communities, and on Iran’s citizens, who face economic hardship amid tightened sanctions. The escalation risks further strain on regional stability in a geopolitically volatile region.
– global bihari bureau
