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August 02, 2022
Iran sanctions spotlight opaque brokers and middlemen behind oil trade
Source: Middle East Eye
Journalist Sean Mathews
Iran is no stranger to sanctions. The county weathered the Trump administration’s “maximum pressure campaign”. Russia has even turned to Iran for lessons on coping with western sanctions imposed over its invasion of Ukraine.
The sanctions unveiled on Monday hit firms in Hong Kong and the UAE, reflecting what Rachel Ziemba, a sanctions expert at the Center for a New American Security, said is the increasing importance of middlemen and opaque brokers for Iran's oil trade.
Despite efforts by countries like Russia, Iran and China to diversify the mediums of their economic transactions, the US dollar still underpins much of global trade. US sanctions carry heft because they can lock firms out of the world's financial system, in addition to freezing assets the entities might have in the US.
But many of the firms involved in Iran's oil sales have limited exposure to the US. "Extensive sanctions have already driven a lot of the trade underground and into smaller entities," Ziemba told MEE.
According to the treasury department, Iran’s Persian Gulf Petrochemical Industry Commercial Co (PGPICC) engaged the firms sanctioned on Monday, including a UAE-based company called Cactus Equipment and Machine Parts.
PGPICC is one of Iran’s largest petrochemical brokers and is itself a subsidiary of Persian Gulf Petrochemical Industry Co, which accounts for half of all of Iran’s total petrochemical exports; but the Emirati company facilitated just several million dollars of monthly turnover in sales for PGPICC, a small portion of its revenue, Ziemba says.
“[The newest sanctions] are likely to raise the costs further for a portion of Iranian oil and oil product exports, but unlikely to choke off the bulk of the flow,” Ziemba said.
Read the full story and more from Middle East Eye.