New Iran Sanctions Are Welcome, but Maximum Impact Demands Maximum Attention

President Trump’s maximum pressure campaign against the Islamic Republic of Iran is taking shape — incrementally. On August 21, the Departments of State and the Treasury sanctioned several individuals and entities involved in Tehran’s illicit oil trade. These targets included Greek national Antonios Margaritis, his web of sanctions busters, and nearly a dozen vessels contributing to Iran’s “shadow fleet.” Washington also targeted two Chinese crude oil and petroleum products terminal and storage operators for importing millions of barrels of Iranian-origin oil from sanctioned tankers.

While these actions will name, shame, and punish the enablers of Iranian sanctions evasion, alone, they are unlikely to yield the Trump administration’s stated aim of zeroing out Iran’s oil exports or change the calculus of the leading buyer of this oil: China.

China Maintains Deep Ties to Iran’s Illicit Oil Economy

China purchases 91 percent of Iran’s oil exports. Its dominant position in Iran’s illicit oil economy is reflected in the August 21 actions, with most targets maintaining significant exposure to or dealings with Chinese buyers. Washington designated several of the sanctioned shadow fleet vessels, as well as the two China-based crude oil terminal and storage operators identified by State, for transporting or dealing in millions of barrels of Iranian oil destined for China.

In May, Treasury sanctioned another terminal operator, Shandong Baogang International Port Co., Ltd. (Baogang International), for dealing in Iranian oil. Research from the Foundation for Defense of Democracies details Baogang International’s position within a Chinese conglomerate’s vertically integrated supply chain — one that appears to maintain joint ventures with Chinese state-owned enterprises such as Sinopec, PetroChina, and China Gas Group. The conglomerate, Wanda Holdings Group, describes having “key core customer” relationships with several Chinese banks, including the Bank of China, Bank of Communications, and Pudong Development Bank.

Chinese Port Groups Remain Unsanctioned Despite Supporting Iran’s Oil Trade

Like Wanda Holdings Group’s Baogang International, one of the terminal operators that Washington targeted in the August 21 actions — Qingdao Port Haiye Dongjiakou Oil Products Co., LTD. (DJK Oil Products) — operates out of China’s Shandong Province. Shandong Province is home to the vast majority of allegedly independent “teapot refiners” dealing in sanctioned oil. While the Trump administration has thus far targeted a handful of individual terminal operators dealing in Iranian crude, it has yet to sanction the larger port groups such as Shandong Port Group or DJK Oil Products’ parent, Qingdao Port International Co. Ltd., which are responsible for a significant portion of port operations in Shandong Province. The United States has also failed to target Chinese banks involved in supporting port group operations and dealings involving sanctioned Iranian oil.

Forging a Path Ahead for Maximum Pressure

Following the 12-Day War between Israel and Iran, the need to constrain Tehran’s main source of revenue generation will be key to handicapping any effort to reconstitute the regime’s missile and nuclear programs. A steady stream of enforcement actions against the Chinese individuals and entities enabling Iranian sanctions circumvention is therefore essential.

In addition to continuing to target vessels, which the Biden administration belatedly started doing, Washington will need to focus on targeting ports and port operators, big and small refiners, and foreign financial institutions processing oil transactions. Unless the United States applies and escalates sustained pressure against this troika, the Trump administration can expect little meaningful change, both from the Islamic Republic and from China, rendering its maximum pressure policy minimally effective. Specific targets should include those linked to Wanda Holdings Group and other similarly situated Chinese conglomerates that build their operations, at least in part, on sanctioned Iranian oil.

Max Meizlish is a senior research analyst for the Center on Economic and Financial Power (CEFP) at the Foundation for Defense of Democracies (FDD), where Behnam Ben Taleblu is senior director of the Iran Program and a senior fellow. For more analysis from the authors and FDD, please subscribe HERE. Follow Max and Behnam on X @maxmeizlish and @therealBehnamBT. Follow FDD on X @FDD, @FDD_CEFP, and @FDD_Iran. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.