THE US sanctioned a United Arab Emirates-based businessman and his alleged network of tankers and shipping companies on Tuesday, accusing them of “smuggling Iranian oil disguised as Iraqi oil”.

The move came amid an increased focus by the US Office of Foreign Assets Control on operators blending Iranian and Iraqi cargoes to obfuscate their origins and skirt sanctions, and as shadow fleet* tankers continue to use Iraq’s ports as hotspots for manipulated Automatic Identification System data.

“This network operates primarily by covertly blending Iranian oil with Iraqi oil, which is then marketed intentionally as solely of Iraqi origin to avoid sanctions”, the Treasury Department said in a press release announcing the designations.

The scheme “has generated hundreds of millions of dollars in revenue” for both Iran and the sanctioned businessman, Waleed Khaled Hameed al-Samarra’i, a citizen of both Iraq and St Kitts and Nevis, the agency said.

In addition to al-Samarra’i, Ofac designated seven companies, including UAE-based Babylon Navigation DMCC and Galaxy Oil FZ-LLC. The former is used by al-Samarra’i for shipping and logistics services and the latter for oil trading, according to the Treasury Department.

The US also sanctioned nine Liberia-flagged tankers linked with Babylon that it accused of being used to “blend Iranian and Iraqi oil at sea” and in Iraqi ports. Most of the vessels in the fleet came under Babylon’s control sometime since December 2023, according to Lloyd’s List Intelligence data, and several have called in the US over the past two years.

Announcing the designations, US Secretary of the Treasury Scott Bessent said, “Iraq cannot become a safe haven for terrorists, which is why the United States is working to counter Iran’s influence in the country.”

Increased scrutiny

Tuesday’s designations marked the second time in less than two months that Ofac targeted a network accused of blending Iraqi and Iranian oil.

On July 3, the US sanctioned a web of companies linked to UK and Iraqi national Salim Ahmed Said, whom it accused of “selling Iranian oil falsely declared as Iraqi oil since at least 2020”.

The increased scrutiny elicited a reaction from Baghdad, with the State Oil Marketing Company (Somo) in July identifying 11 tankers it said illegally loaded petroleum products from Umm Qasr and Khor al Zubair. None of the 11 tankers identified by Somo were targeted by Ofac on Tuesday.

Iraq’s Ministry of Oil previously denied that Iraq “buys or receives Iranian crude oil or re-exports it”.

Aside from the alleged blending operations, Iraq’s terminals also remain a hotspot for AIS manipulation, with vessels creating fake but believable AIS trails to show they are loading oil products or LPG in Khor al Zubair to disguise the true origin of their cargo.

Lloyd’s List Intelligence AIS data identified more than 920 voyages by tankers and liquefied petroleum gas carriers into Iraq’s Khor al Zubair port through the first half of 2025. An analysis of LLI data and satellite imagery from Planet Labs and the European Space Agency suggests nearly half were faked by vessels broadcasting falsified AIS signals.

* Lloyd’s List defines a tanker as being part of the Shadow Fleet if it engages in one or more deceptive shipping practices indicating that it is involved in the facilitation of sanctioned oil cargoes from Iran, Russia or Venezuela. Or it is sanctioned for participation in sanctioned oil trades or is sanctioned for links to a company that is sanctioned for facilitating the export of sanctioned oil.