Iran’s Petroleum Exports to China and U.S.
Sanctions
October 23, 2023
Members of Congress have long expressed concern with Iranian petroleum exports. The October 2023
attacks on Israel by Hamas, which Iran supports, have increased congressional concern. Iran’s exports
have risen in 2023, with most of this increase attributed to China. The nature of Iranian petroleum exports
(including the range of evasive techniques used to obscure them) complicates efforts to obtain a complete
picture of the trade and the effectiveness of U.S. sanctions policy.
Background: U.S. Sanctions
U.S. efforts to limit Iranian exports of petroleum and petroleum products (hereinafter petroleum) via
sanctions go back decades. Section 1245 of the FY2012 National Defense Authorization Act (P.L. 112-81)
(22 U.S.C. § 8513a) directed the President to block from the U.S. financial system foreign financial
institutions that conduct transactions with Iran’s Central Bank or other designated Iranian banks whose
assets are blocked under the provision, except for foreign central banks that do not engage in transactions
related to Iranian petroleum. The statute excepts from these secondary sanctions foreign financial
institutions in countries determined to be significantly reducing their purchases of Iranian petroleum
(President Trump approved the last such exception in 2018). The President also has waiver authority if he
certifies that there are “exceptional circumstances that prevented the country from being able to reduce
significantly its purchases of petroleum,” but no such waivers have been issued to permit new petroleum
imports, though some were issued to permit transfers of Iranian funds to banks in third countries. Under
Executive Order 13846, issued by President Trump in 2018 to reinstate U.S. sanctions as part of his
decision to cease U.S. participation in the Joint Comprehensive Plan of Action (JCPOA), the Secretary of
State has the additional authority to sanction any person determined to have engaged in a transaction
related to the “purchase, acquisition, sale, transport, or marketing” of Iranian petroleum. The United
States has imposed sanctions on dozens of companies for their role in the illicit shipment of Iranian
petroleum to Asia under E.O. 13846.
Iran’s Petroleum Exports to China
U.S. secondary sanctions are intended to impose financial or other costs to dissuade foreign persons from
participating in sanctionable activities, but sanctions do not in and of themselves prevent those activities.
