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U.S. Sanctions Iran's Petroleum Ministry, National Iranian Oil Company, Tanker Subsidiary -- 2nd Update

10/26/2020 | 04:25pm EST

By Ian Talley in Washington and Benoit Faucon in London

The Trump administration on Monday imposed counterterrorism sanctions on Iran's Ministry of Petroleum, the National Iranian Oil Company and its tanker subsidiary in a pre-election move that analysts say will make it more difficult for the pressure campaign to be reversed in the future.

The Treasury Department also blacklisted more than a dozen other Iranian state energy firms and their subsidiaries, and top officials at the ministry and the firms, which include the National Petrochemical Company and the National Iranian Oil Refining and Distribution Company. Those targeted represent a large portion of Iran's most important revenue-earning sector.

The action comes amid concern within the administration that Democratic presidential candidate Joe Biden, who is leading in most battleground-state polls, could ease sanctions after promising in the campaign to re-engage with Iran, should he win next week's election.

The Treasury Department, in issuing the sanctions, said Iran's petroleum ministry and the blacklisted companies serve as critical financing sources for the Islamic Revolutionary Guard Corps' Quds Force, Iran's elite military unit, which is designated by the U.S. as a terrorist group for its role in directing Tehran's proxies abroad.

"The regime in Iran uses the petroleum sector to fund the destabilizing activities of the IRGC-QF," said Treasury Secretary Steven Mnuchin.

"The few remaining buyers of Iranian crude oil should know that they are helping to fund Iran's malign activity across the Middle East, including its support for terrorism," said Secretary of State Mike Pompeo.

Iran's oil minister, Bijan Zanganeh, who was among the officials targeted by the Treasury Department on Monday, dismissed the action in a tweet as "a failure of Washington's policy of reducing oil exports to zero."

"The era of unilateralism is over in the world," he said, adding, "Iran's oil industry will not be hamstrung."

Although the firms targeted by the U.S. were previously sanctioned, the new designations come under counterterrorism authorities, which analysts and former U.S. officials say are much more difficult to unwind than other types of sanctions. Such sanctions can also carry tougher penalties for anyone caught transacting with the blacklisted firms despite the stigma of working with terror-designated entities.

The designations put nearly all of Iran's petroleum sector under counterterror sanctions and should act as an additional deterrent for companies still doing business with Iran, analysts said.

An official at Iran's oil ministry said the sanctions program was already so extensive that it didn't expect any impact on oil sales from the new listings. But the new restrictions could stop companies planning to return to start new discussions with Iran, the official said.

"Whilst those who currently continue to deal with NIOC or Iranian oil without benefiting from any license will no doubt shrug their shoulders, those Western entities looking to legitimately re-engage after the U.S. election will likely think twice," said sanctions lawyer Nigel Kushner, who heads London-based W Legal Ltd.

In justifying its action, Treasury pointed to the sale of nearly 10 million barrels of crude oil by the Quds Force using the National Iranian Tanker Company's vessels in the spring of 2019, transactions it said were worth an estimated $5 billion. NITC couldn't be reached for comment.

Treasury also said Iran's state energy companies were used to fund Lebanon's Hezbollah, which is designated by the U.S. and several dozen other nations as a terrorist group, and to support the Assad regime in Syria.

Companies blacklisted Monday include several firms based in the U.K. and the United Arab Emirates, some of which the Treasury Department said were used to ship gasoline to Venezuela in violation of U.S. sanctions against the Maduro regime.

Mr. Biden has said he would return to the 2015 multilateral Iran nuclear agreement, which President Trump exited in 2018, if Iran returns to compliance with the accord. Mr. Biden has also said he would attempt to negotiate new constraints on Tehran's nuclear program. The Biden campaign didn't immediately respond to a request for comment.

Some European companies were forced to leave the country after the Trump administration reinstated sanctions in 2018 as they were more exposed to U.S. pressure. Chinese refiners have continued to buy Iranian oil despite a total U.S. ban on the purchases.

After collapsing from peak levels of 2.73 million barrels a day in April 2018 to 481,000 barrels a day in February this year, Iran's oil exports crept back to 1.2 million barrels a day in September, according to data from U.S. shipping analytical company TankerTrackers.

Write to Ian Talley at ian.talley@wsj.com and Benoit Faucon at benoit.faucon@wsj.com

(END) Dow Jones Newswires

10-26-20 1724ET

Stocks mentioned in the article
ChangeLast1st jan.
LONDON BRENT OIL -0.55% 47.34 Delayed Quote.-27.73%
NATIONAL PETROCHEMICAL COMPANY 2.07% 32 End-of-day quote.34.79%
WTI -0.63% 44.865 Delayed Quote.-26.73%
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