A senior US Treasury official revealed on Tuesday that Iran has been relying on Malaysian service providers to evade international sanctions and sell its oil in the region.
Despite significant sanctions imposed by Washington on Iran and its proxies aimed at choking financial flows, Tehran has managed to continue its oil sales in East Asia, financing armed proxies like Hamas and Yemen’s Huthis.
Since the Islamic Republic’s establishment in 1979, the U.S. has imposed a multitude of sanctions under successive administrations. Before Russia’s war of aggression against Ukraine, Iran was the most sanctioned country by the U.S
Impact of Sanctions on Iran
The US has imposed severe sanctions on Iran and its proxies with the intention of disrupting financial flows that allegedly support instability in West Asia. These sanctions have targeted various sectors of Iran’s economy, including its oil exports, in an attempt to limit Tehran’s ability to fund armed groups and destabilize the region.
Financing of Armed Proxies
According to the senior US Treasury official, Iran’s oil sales in East Asia have been the primary source of funding for armed proxies such as Hamas and Yemen’s Huthis. The official, speaking on condition of anonymity, highlighted how these financial resources have been used to orchestrate attacks and destabilize the region, with particular mention of Houthi attacks threatening commercial shipping.
Malaysian Relations and Routes
The official also revealed that Iran has been sending its oil shipments to buyers in the region through waters near Singapore and Malaysia.
In December last year, the US Treasury imposed sanctions on four Malaysian companies, alleging their involvement in aiding Iran’s drone production. Additionally, several new sanctions have been introduced to cut off financial flows to Iran, which US officials claim contribute to instability in the Middle East.
Hossein Hatefi Ardakani was among those sanctioned by the US Treasury for overseeing a “transnational procurement network” operating across the Middle East and East Asia. Ardakani was accused of acquiring “servomotors, inertial navigation equipment, and other items” for Iran’s drone program through front companies located in Malaysia.
This reliance on Malaysian service providers has enabled Iran to circumvent international sanctions and continue its oil trade, despite efforts by the US to disrupt these financial flows.
US Response and Actions
In response to Iran’s evasion of sanctions, the US Treasury announced its intention to work closely with maritime operators and banking executives in Singapore and Malaysia. The aim is to halt the oil sales and prevent further funding of armed groups like Hamas and the Huthis, thereby diminishing Iran’s ability to finance attacks and destabilize the region.
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Efforts to Diminish Iran’s Oil Exports
US Treasury Secretary Janet Yellen has previously stated that Washington is working to diminish Iran’s ability to export oil. She hinted at the possibility of further actions to achieve this goal, indicating a continued effort by the US to tighten the economic noose around Iran and limit its ability to fund armed proxies. The US officials are expected to meet Malaysian authorities to create awareness about the sanctions.
Impact of Hamas Attacks
Hamas’ unprecedented attack on Israel on October 7 resulted in significant casualties, with more than 1,170 people, mostly civilians, losing their lives according to an officially published tally of Israeli official figures. In response, Israel launched a retaliatory offensive in Gaza, resulting in further casualties, including at least 34,789 people, mostly women and children, according to the Hamas-run territory’s health ministry. This escalation highlights the importance of efforts to cut off Iran’s financial support for armed groups like Hamas, which perpetuate violence and instability in the region.
US is taking efforts to disrupt Iran’s financial support for armed proxies and prevent further destabilization of the region. It also underscores the role of Malaysian service providers in facilitating Iran’s evasion of international sanctions and the importance of international cooperation to address this issue effectively.
