On October 11, 2024, the Office of Foreign Assets Control (“OFAC”) issued a determination under Section 1(a)(i) of Executive Order 13902 dated January 10, 2020 (“EO 13902”) designating the petroleum and petrochemical sectors of the Iranian economy as subject to US secondary sanctions. This industry sector designation adds to secondary sanctions designations announced in January 2020 under EO 13902 on the Iranian construction, mining, manufacturing, and textile sectors of the Iranian economy as well as a subsequent designation of the Iranian financial sector in October 2020 also under EO 13902 (as previously analyzed on this blog here).
OFAC announced that the determination was issued in response to an Iranian missile attack on Israel on October 1, 2024 (see OFAC’s press release here). These secondary sanctions add to existing primary and secondary sanctions targeting the Iranian petroleum and petrochemical sectors, including long-standing sanctions on the Iranian energy sectors under the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, the Iranian Transactions and Sanctions Regulations, 31 C.F.R. Part 560 and related executive orders.
OFAC’s October 11, 2024 designation under EO 13902 of the petroleum and petrochemical sectors of the Iranian economy provides additional authority for sanctioning non-US persons that engage in the following activities involving the two sectors:
- Operating in the Iranian petroleum and petrochemical sectors;
- Knowingly engaging in a significant transaction for the sale, supply, or transfer to or from Iran of significant goods or services used in connection with the petroleum and petrochemical sectors of the Iranian economy;
- Materially assisting, sponsoring, or providing financial, material, or technological support for, or goods or services to or in support of, any persons designated as Specially Designated Nationals under EO 13902, or
- Being owned, controlled by, or found to be acting or purporting to act on behalf of, directly or indirectly, any person designated under EO 13902.
While most of these activities are already subject to secondary sanctions under existing authorities, this latest designation indicates that the US Government intends to further restrict the ability of non-US persons to invest in and supply goods and services to the Iranian petroleum and petrochemical sectors without risking their access to the US market and the US financial system.
