US sanctions Iranian financier for laundering millions for Houthis

Rep. Michael Lawler, who chairs the Middle East and North Africa Subcommittee, opened the hearing titled “A Return to Maximum Pressure: Comprehensively Countering the Iranian Regime’s Malign Activities,” by contrasting the Trump administration’s “maximum pressure” approach with what he called a dangerously lenient stance under President Biden.

“Joe Biden’s foreign policy decisions in the Middle East were ill conceived, disorganized, and at times fatal, including for US service members,” Lawler said.

He charged that Biden “left the world more volatile and less safe than he found it,” accusing his administration of “appeasing terrorists and enabling an “unholy alliance” between Iran, Russia, and China, with policies resulting in higher revenue flows from oil sales and an accelerated nuclear program.

He called for a crackdown on Iran’s oil exports—especially to China—arguing that “a nuclear Iran is not an option.” Lawler warned that “one way or another, Iran’s nuclear ambitions are finished,” and praised the Trump administration for “restoring the much-needed and most effective maximum pressure campaign.”

Norman Roule, a former US intelligence official and current advisor at CSIS, laid out the scope of the threat. 

“Iran now appears capable of producing its first quantity of 90% enriched uranium, sufficient for one nuclear weapon in about a week. Tehran's current stockpile of 60% enriched uranium is sufficient for about seven nuclear weapons,” he said.

Roule warned that Iran’s military allies such as Hezbollah in Lebanon remain dangerous despite recent setbacks. “The Islamic Revolutionary Guard Corps Quds Force aims to revive these groups,” he said, pointing to Iran’s attempts to reestablish influence in the Red Sea via Sudan as Iran's Houthi militia in Yemen continues its maritime blockade and attacks on US vessels.

“Iran looks like a country building a nuclear weapons program,” he said, although it “has yet to make the final steps required because it either fears discovery and the subsequent military consequences or believes its current approach offers diplomatic advantages.”

Claire Jungman of United Against Nuclear Iran focused on Iran’s financial backbone.
“Despite US sanctions, Iran continues to export over 1.5 million barrels of oil per day, earning tens of billions of dollars annually,” she said.

“These revenues are not just supporting Iran's economy, they are directly funding terrorism, nuclear escalation and regional destabilization.”

She emphasized the central role of the IRGC, adding, “Up to half of Iran's oil exports are now controlled by the Islamic Revolutionary Guard Corps.

“Every barrel of Iranian oil sold on the black market strengthens the IRGC’s hand bankrolling groups like Hamas, Hezbollah and the Houthis.”

Jungman called for a sweeping enforcement campaign. “Sanction every vessel, registry, insurer, captain and port that helps move Iranian oil,” she urged.

“Cutting off the money is our best tool to constrain Iran's most dangerous activities.”

Dana Stroul, Director of research at the Washington Institute, argued the time is ripe for decisive action. “The Iranian regime is on its back foot,” she said. “The pillars of its security strategy… are more vulnerable today than at any time in the history of the regime.”

She urged combining diplomacy with a credible military threat. “The administration must keep its military options open by maintaining a robust US military posture in the region,” she said.

“Real opportunities exist to block Iran from pursuing a nuclear weapons capability… but the United States must lean into diplomacy as well.”

Witnesses and lawmakers alike agreed that Iran is under pressure, but without sustained enforcement, the opportunity to constrain its ambitions may be lost.

US President Donald Trump on Sunday warned of bombing Iran if Tehran fails to reach a deal over its nuclear program.

"If they don't make a deal, there will be bombing — and it will be bombing the likes of which they have never seen before," Trump was quoted as saying during a phone interview with NBC News' Kristen Welker.

Trump on Friday also warned that “bad, bad things” would happen if Tehran did not agree to a nuclear deal.

Last month, Trump signed a directive restoring the so-called maximum pressure policy on Iran of his first term and warned of "catastrophic" consequences if Tehran does not make a deal on its nuclear program.

Trump's maximum pressure approach in his first term beginning in 2018 pummeled Iran's economy, causing a dramatic decline in oil exports and skyrocketing inflation.

The move marks part of a stepped-up enforcement effort under a recent presidential directive ordering a “maximum pressure” campaign of sanctions on Tehran.

“Iran’s proliferation of UAVs and missiles—both to its terrorist proxies in the region and to Russia for its use against Ukraine—continues to threaten civilians, US personnel, and our allies and partners,” Treasury Secretary Scott Bessent said.

“Treasury will continue to disrupt Iran’s military-industrial complex and its proliferation of UAVs, missiles, and conventional weapons that often end up in the hands of destabilizing actors, including terrorist proxies,” he added in a statement.

“The United States will use all available means to expose and disrupt Iran’s growing UAV and missile development programs and weapons proliferation,” the State Department said in support of the sanctions. “We will continue to act against the complex schemes Iran uses in third countries to conceal its acquisition and its transfers of sensitive technology.”

"We will continue to act against the complex schemes Iran uses in third countries to conceal its acquisition and its transfers of sensitive technology. Iran uses this technology and the proceeds from arms sales to bolster its military industrial base to build missiles and UAVs, which are used against fellow countries, as well as exported to Russia, terrorist proxy groups around the Middle East, and to other actors of concern," added Tammy Bruce, the State Department Spokesperson.

The designated entities include Rah Roshd, an Iran-based supplier linked to the Mohajer-6 drone, and Chinese manufacturer Zibo Shenbo, which allegedly shipped tens of thousands of motors to Iran. UAE firms, including Infracom and Diamond Castle, were named as intermediaries.

The sanctions freeze US-based assets and bar transactions with US persons. Concurrently, the Justice Department charged two Iranians with conspiring to smuggle US technology to the Islamic Revolutionary Guard Corps, the Iranian transnational paramilitary group the US classifies as a foreign terrorist organization.

Western powers accuse Iran of providing drones and missiles to Russia for its full-scale invasion of Ukraine.

Iranian drones have repeatedly been deployed in attacks on Ukraine’s infrastructure and other civilian targets. The Shahed 136 drone is typically launched alongside cruise and ballistic missile attacks to overwhelm Ukrainian air defenses.

While the Trump administration has previously used tariff hikes as leverage against nations it regarded as rivals, this approach has little impact on Iran, which exported only $6.2 million worth of goods to the US last year and just $2.2 million in 2023.

However, secondary tariffs could pose a serious threat to Iran. Under this mechanism, the US could target countries that import sanctioned Iranian goods by imposing tariffs on their exports to the American market.

This is particularly significant given that, according to Iranian customs data, about 83% of Iran’s non-oil exports go to seven countries: China, Iraq, the UAE, Turkey, Afghanistan, Pakistan, and India. With the exception of Afghanistan, all have substantial trade ties with the US. Continued commerce with Iran could jeopardize their access to the American market.

This issue presents two major challenges for Iran. First, it threatens the country’s ability to export sanctioned goods—such as oil, petrochemicals, and metals—to key markets. Second, it disrupts Iran’s strategy of using trade partners to rebrand these goods and reroute them to third countries.

In the first 11 months of the last Iranian fiscal year, which ended on March 20, Iran exported $43 billion worth of goods to these seven key countries. Meanwhile, according to the US Census Bureau, those same countries exported over $550 billion worth of goods to the United States in 2024—more than 11 times the value of their imports from Iran.

Take China, for example. Iranian customs data show it imported around $13.8 billion in non-oil goods from Iran during that period. In addition, tanker tracking data indicate that China received approximately 1.5 million barrels per day of Iranian crude and fuel oil--worth an estimated $40 billion.

Although China benefits from steep discounts on Iranian petroleum and non-oil goods, it exported $427 billion worth of goods to the US last year--highlighting the potential cost of secondary tariffs.

Rebranding Iranian products

The gap between Iran’s official trade figures and those reported by its key trading partners suggests that a substantial share of Iranian exports is being rebranded and re-exported as if originating from those countries.

For example, Iranian customs recorded $13.8 billion in non-oil exports to China over the first 11 months of the last fiscal year, yet China’s Customs data show only $4.44 billion in non-oil imports from Iran for all of 2024. Similarly, Iran reported $6.4 billion in exports to Turkey, but Turkish data—including natural gas—registered just $2.45 billion in imports from Iran. The discrepancy persists with India: Iranian data show $1.8 billion in exports, while India’s Ministry of Commerce reported only $718 million in imports from Iran.

Iraq, the UAE, Pakistan, and Afghanistan do not publish detailed trade statistics. However, Iran's reliance on countries like the UAE for rebranding sanctioned goods and rerouting them to global markets appears highly likely.

As noted, Iran’s foreign trade is concentrated in a small group of countries. This concentration means that imposing US tariffs on those re-exporting Iranian sanctioned goods would not be especially difficult.

Another key point is that US sanctions extend well beyond crude oil. They also target Iranian exports of petroleum products (such as liquefied petroleum gas, or LPG), petrochemicals, metals, and more. These items make up the majority of Iran’s non-oil exports.

In the first 11 months of the last fiscal year, Iran exported over $10 billion in LPG, $13 billion in petrochemicals, $10 billion in metals (especially steel, aluminum, and copper), and $5 billion in gas. These four categories alone accounted for 70% of Iran’s non-oil exports, with nearly all shipments headed to the seven countries mentioned above.

Economic ties with Japan have collapsed despite the absence of political disputes, said Ali Majedi, Iran’s former ambassador to Germany, Japan, and Brazil.

“Europe still does some business with us,” Majedi said, but “But East Asia, outside of China, doesn’t work with us at all anymore.”

The former official said sanctions had affected trade not just with the West, but with Asian economies such as Japan, South Korea, and India, where commercial relations have reached a minimum.

“When I was in Tokyo in 2004, Japan was importing 750,000 barrels of oil per day and trade between us exceeded $10 billion,” Majedi added. “Now, even for items not under sanctions, trade is practically nonexistent.”

While China remains Iran’s last major oil customer in the region, Majedi said other East Asian nations have largely fallen in line with US restrictions. He added that smaller countries in the region still depend on American security guarantees and avoid Iranian trade out of fear of secondary sanctions.

Findings by Iran International show that while Iran’s oil sales to China dropped sharply last month, the decline in export revenues began months earlier, coinciding with US sanctions on dozens of tankers carrying Iranian crude.

The Biden administration imposed sanctions on dozens of tankers carrying Iranian oil after Iran’s missile attack on Israel in early October last year. While this initially led to a relative decline in Iranian oil offloading at Chinese ports, Beijing fearing potential US sanctions under Donald Trump's administration, prohibited sanctioned oil tankers from entering Shandong port.

Iran’s only oil customers are small, independent Chinese refineries, known as "teapots," most of which are based in Shandong, where 90% of Iranian oil cargoes is discharged.

Data from Kpler shows that Iran’s oil deliveries to China fell below 850,000 barrels per day in January, compared to over 1.8 million barrels per day in October last year.

“Right now, we are still exporting oil. There has been no disruption in our shipment routes,” Paknejad told Iranian state media.

Asked about Washington’s efforts to bring Iran’s oil exports to zero, Paknejad said such statements remain unproven. “All of this is being said for now. What is happening in practice is that we are exporting,” he said.

Asked if Iran is ready to deal with tougher sanctions enforcement by the US, Paknejad said, “Naturally, if any restrictions are imposed on Iran's oil sales, we have taken the necessary measures to respond.”

Paknejad also denied any decline in oil sales, saying Iran set a record for crude exports in the Iranian month of Dey (Dec21–Jan. 20).

Earlier this month, the US Treasury imposed sanctions on Paknejad, breaking with its usual practice of sparing senior political officials. The move was part of a broader effort to tighten enforcement on Iranian oil exports, which Washington says help fund Tehran’s military and security forces, including the Islamic Revolutionary Guard Corps (IRGC).

Paknejad’s comments on Saturday also follow a report earlier this week from Iraq’s Oil Minister Hayan Abdel-Ghani, who said that Iranian tankers intercepted by US forces in the Gulf were found to be using forged Iraqi documents.

"We received verbal inquiries about oil tankers detained by US naval forces. It turned out these tankers were Iranian and were using fake Iraqi manifests," Abdel-Ghani said on Iraqi state TV.

Iran denied the claim, saying its oil exports are conducted “within accepted trade frameworks,” and reaffirmed its position in a call between Paknejad and his Iraqi counterpart on Friday.

The dispute comes amid a broader US effort to crack down on alleged fuel smuggling and sanctions evasion by Iranian-linked networks. In December, Reuters reported that a smuggling network using forged documents was generating at least $1 billion annually for Iran and its allies in Iraq.