US sanctions Iran’s petrochemical sector

Mohamed Abdel Ghaffar

Suddenly, Iran was hit by fresh US sanctions targeting its petrochemical sector. Unlike previous US administrations, President Donald Trump has taken a different approach regarding Iran.

Petrochemicals are defined as chemicals extracted from crude oil through a number of chemical processes. Iran’s economy relies heavily on oil. Therefore, any sanctions targeting Tehran’s oil industry is a blow to the mullah regime.

The United States imposed fresh sanctions on Iran on March 18. The US State Department is blacklisting companies based in South Africa, Hong Kong and China engaging in “significant transactions” to trade in Iranian petrochemicals.

The State Department also blacklisted Iran’s armed forces social security investment company and its director for investing in sanctioned entities.

The US Treasury Department said Iran’s oil ministry last year awarded Khatam al-Anbiya, the IRGC’s economic and engineering arm, 10 projects in the oil and petrochemical industries worth $22 billion, four times the official budget of the IRGC.

The United States sanctioned Iran’s largest petrochemical holding group, Persian Gulf Petrochemical Industries Company (PGPIC), for indirectly supporting the Islamic Revolutionary Guard Corps (IRGC), a step it said aimed to dry up revenues to the Iranian military unit but that analysts called largely symbolic.

“This action is a warning that we will continue to target holding groups and companies in the petrochemical sector and elsewhere that provide financial lifelines to the IRGC,” Treasury Secretary Steven Mnuchin said in a statement.

The US sanctioned PGPIC for providing financial support to the economic arm of the IRGC, a military organization in charge of Iran’s ballistic missile and nuclear programs.

The Treasury said it had also sanctioned the PGPIC holding group’s network of 39 subsidiary petrochemical companies and foreign-based sales agents. PGPIC and its units have 40% of Iran’s petrochemical production capacity and account for 50% of Iran’s petrochemical exports, it said.

The sanctions make these companies “specially designated nationals,” a status that effectively blocks US and international persons from dealing with them. Further, anyone who does so themselves risks becoming a “specially designated national.”