US Targets Iran's Defense Industrial Base With New Sanctions

The Trump administration has placed Iran's "defense industrial base" at the center of a renewed economic pressure campaign, aiming to starve the Iranian regime of resources it relies on for survival and regional influence. The U.S. Treasury Department announced it stands ready to impose economic actions against this sector to prevent Tehran from rebuilding its production capacity and projecting power beyond its borders.

Washington is preparing to take action against any foreign company supporting illicit Iranian trade, including airlines, as well as any individual or vessel facilitating the illegal flow of oil or other goods through covert commercial or financial channels. The Treasury warned it may, when necessary, impose secondary sanctions on foreign financial institutions that enable Iranian activities, including those linked to small, independent Chinese oil refineries.

Sanctions Evasion and Digital Assets

The Treasury Department will aggressively target both traditional sanctions-evasion methods and the exploitation of digital assets, while continuing to freeze funds stolen from the Iranian people. Through this blockade, the administration is directly going after the regime's main revenue source, warning that anyone or any vessel facilitating the illicit flow of oil or other products risks U.S. sanctions.

The United States is also seeking to dismantle a complex network that supports Iran in Iraq, facilitating its access to oil and minerals through measures that legitimize oil smuggling and make its export appear official from Iraqi territory.

Iraqi Oil Official Sanctioned

These moves coincided with sanctions on Iraqi oil official Ali al-Bahadli for his pivotal role in facilitating the transfer of Iraqi petroleum products for the benefit of oil smuggler Salim Ahmed Saeed, known for his cooperation with Iran, as well as the Iran-backed terrorist militia "Asa'ib Ahl al-Haq." The Treasury stated that al-Bahadli exploited his official positions for years—first as head of the Oil and Gas Committee in the Iraqi parliament, then within the Iraqi Oil Ministry—to enrich Saeed, the Asa'ib Ahl al-Haq gang, and consequently Iran.

The U.S. Office of Foreign Assets Control added Saeed to the sanctions list in June 2025 for managing a network of companies that sell Iranian oil, falsely declaring it as Iraqi oil to evade sanctions, including the listed company VS Oil Terminal. Washington says a key element of this operation is Saeed's ability to obtain special privileges for accessing Iraqi oil and to secure forged documents from Iraqi government officials, which lent legitimacy to the illicit oil.

"To this end, Saeed was responsible for bribing complicit officials in the Iraqi government, as well as, reportedly, appointing a person to his official position," the Treasury said.

Network of Companies and Militia Ties

As part of his activities on behalf of the organization, Mustafa Hashem Lazim al-Bahadli, also known as "Sayed Aoun," a leader and economic official in the "Coalition for Humanity" organization, also conspired to directly support Iran. Al-Bahadli owns or controls four Iraqi oil-sector companies that have links and dealings with the Iranian Revolutionary Guard Corps' Quds Force, which the U.S. designates as a terrorist organization.

Washington accuses "Sayed Aoun" of playing a significant role after the U.S. withdrawal from Iraq in 2011 in establishing a unit for transporting and securing oil, enabling the organization to become a dominant player in the Iraqi minerals sector, as well as facilitating its entry into oil theft, which focused on stolen or subsidized oil. In direct cooperation with Laith al-Khazali, a prominent militia leader in Iraq listed on U.S. sanctions, "Aoun" took control of financing oil smuggling and oversaw the organization's minerals sector activities.

In southern Iraq, al-Bahadli managed oil smuggling operations and the organization's projects, using companies, projects, and government contracts as a cover for its financial activities. As part of his activities on behalf of the "Humanitarian Assistance" organization, al-Bahadli also conspired in direct dealings with Iran and the Quds Force of the Iranian Revolutionary Guard Corps, classified as a terrorist organization by the United States. As a member of the organization's economic committee, al-Bahadli participated in negotiating oil shipping contracts from Iran and coordinating with the Quds Force regarding the shipment of the organization's oil.

The Trump administration is waging a targeted campaign against the smuggling of Iraqi oil to Iran.