WASHINGTON—The U.S. sanctioned one of Iran’s biggest petrochemical companies on Friday, hitting a top revenue earner as the Trump administration attempts to strong-arm Tehran into a new nuclear and security pact.
The Treasury Department added Persian Gulf Petrochemical Industries Company and a network of 39 associated companies to its sanctions blacklist, saying the firm helps finance the Islamic Revolutionary Guard Corps, Iran’s elite military force recently designated by the U.S. as a terror group.
The administration’s decision last year to reimpose many sanctions against Iran has pushed Iran’s economy into multiyear contraction, fueling tensions many experts fear could spark war between the two nations and their regional allies, but has yet to persuade Tehran’s government into negotiations.
Iran’s mission to the United Nations didn’t immediately respond to a request for comment, but top officials in Tehran have vowed to fight the sanctions and said they would not succumb to what they say amounts to economic warfare. The Persian Gulf Petrochemical Industries Company, or PGPIC, didn’t immediately respond to requests for comment. Its chief executive was quoted in Iranian press last month as saying the general sanctions against the sector had complicated its business transactions but had not affected exports.
Iran’s oil exports have already taken a nose dive as the administration pushes Tehran’s crude buyers around the world to stop importing. Besides slashing income from Iran’s most important sector, the U.S. has also hit the country’s other important industries, including banking, shipping, autos and metal exports.
Iran’s petrochemical exports—the second most important to the economy after oil—had already been banned and many of the state-owned companies blacklisted under previous sanctions rounds. But by targeting other major operations by name, the administration is increasing the risk for the banks, insurers, shippers and traders helping to facilitate sales of products made from Iran’s crude oil and natural gas, such as fertilizers and key ingredients used to make laundry detergents, paper and rocket propellants.
“The U.S. government intends to vigorously enforce those sanctions in order to prevent Iran from generating revenue to support its destructive and destabilizing activities around the world,” the U.S. Treasury said.
PGPIC and its group of subsidiary petrochemical companies hold 40% of Iran’s total petrochemical production capacity and are responsible for 50% of Iran’s total petrochemical exports, the Treasury said.
Thirty-nine PGPIC subsidiaries and other associated companies were also blacklisted by the Treasury on Friday, including two companies based in the U.K. and the Philippines, NPC International and NPC Alliance Corporation. The Philippines firm did not immediately respond to a request for comment. A woman answering the phone at NPC International who said she was a manager at the company but wouldn’t give her name said the company had not been in violation of U.S. sanctions and wouldn’t violate them. She said she did not know the company had been blacklisted.
The risk of U.S. sanctions or other penalties facing companies will likely further cut Iran’s petrochemical sales. At the very least, the income Iran receives from remaining illicit purchases will be eroded by the higher premium charged for transport and trade of black-market products, experts say.
After last year withdrawing from the 2015 Iran nuclear deal, the U.S. said it is seeking a more stringent nuclear accord with Iran as well as a broad security pact that would curb Tehran’s missile development and require it to pull back from its military interventions in Syria, Iraq, Lebanon and Yemen. Some former Obama administration officials say the Trump White House’s real objective is to undermine or even topple the Iranian regime.
As U.S.-Iranian tensions have increased, President Trump has made it clear that he wants to avoid a military clash with Tehran. While the U.S. has sent additional forces to the region, its military posture has been generally cautious, analysts say. The U.S. aircraft carrier the Pentagon recently deployed has been operating in the Arabian Sea and not in the Persian Gulf, a move that appears designed to minimize the chances of confrontations.
But the petrochemical sanctions indicate that the Trump administration hasn’t eased off on its campaign of applying maximum economic pressure on the Iranian regime.
“Maximum pressure on #Iran’s regime continues today,” Secretary of State Mike Pompeo said on his official Twitter account. “The U.S. will deny the regime the money it needs to destabilize the Middle East.”
The major challenge for the U.S. is to come up with more effective enforcement of its petrochemical sanctions. China, the United Arab Emirates, Turkey, Iraq, India, Afghanistan and Pakistan are the main importers of Iran’s petrochemical products. Many of the biggest importers are countries that have proved reluctant to abide by U.S. sanctions and have companies operating outside or on the periphery of the financial system through which the U.S. leverages its sanctions power.
Saeed Ghasseminejad, an analyst at the Foundation for Defense of Democracies, said Friday’s action “can have a major effect on Iran’s export revenue and its access to hard currency if it is strictly enforced.” The Washington-based think-tank has advocated for tougher sanctions against Tehran.
In targeting PGPIC, a major Iranian company publicly traded on Tehran’s stock exchange, the U.S. Treasury cited the firm’s work for Khatam al-Anbiya, the engineering conglomerate owned and run by the IRGC.
The IRGC, U.S. officials and analysts say, has steadily gained control of much of Iran’s economy over the last two decades. That move, they say, provides the military force direct funding for weapon purchases, training and financing conflicts through its proxies across the region. Its economic heft gives the group significant political leverage and undercuts the political power the private sector once wielded in Iran: analysts point out previous political upheavals gained traction when the bazaar revolted.
—Courtney McBride contributed to this article.