US slaps sanctions on petroleum companies working with Iran

The Biden administration sanctioned companies that continue to conduct business with Iran this week, the majority of them dealing in petroleum and petrochemicals.

The Treasury Department's Office of Foreign Asset Control said it targeted companies it believes are helping sell Iranian oil and petrochemicals to East Asian buyers.

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The department listed several companies it has acted against: Dubai-based Blue Cactus Equipment and Machinery Spare Parts Trading LLC, two Hong Kong companies – Farwell Canyon HK LLC and Shekufei International Trading Co. Limited, and Malaysia’s PZNFR Trading.

The action will block all property owned by the companies or people linked to them. Additionally, it prohibits any financial institution from transferring any transaction for the companies or people associated with them.

Diplomatic path

The US views this action a way to ensure Iran disassemble its nuclear program. However, the US could be sending mixed messages of its intentions towards the pariah nation. Shortly, after Russia invaded Ukraine, the Biden administration signaled it considered Iran as a possible stop gap oil sources for imported Russian crude. Iran, along with Saudi Arabia and Venezuela, were three possible sources of replacement crude.

This week, officials said the action was a way to return the country back to the stalled nuclear talks.

"The United States continue to pursue a path of diplomacy to achieve a mutual return the full implementation of the Joint Comprehensive Plan of Action," Brian E. Nelson, undersecretary of the Treasury for Terrorism and Financial Intelligence.

"Until Iran is ready to return to full implementation of thee JCPOA, we will continue to use our sanctions authorities to target exports of petroleum, petroleum products and petrochemical products from Iran," Nelson said.

He noted that the US continues to sanction front companies China and the United Arab Emirates companies for brokering sales of Iranian petroleum products.

"This is simply window dressing," energy analyst Brian Grand told Capital.com.

Sanctions against the four companies will have little, if any impact on Iran's oil or petrochemical industry. Grand, an energy analyst in McKinney, Texas, said contracts with Iran are "extremely" profitable, some companies are willing to overlook the possibility of US sanctions.