The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has announced new sanctions targeting a network involved in smuggling Iranian oil disguised as Iraqi oil. The network, led by Waleed al-Samarra’i, an Iraqi-Kittitian businessman based in the United Arab Emirates, is accused of blending Iranian oil with Iraqi oil and marketing it as solely of Iraqi origin to evade international sanctions.
According to the Treasury, this operation has generated hundreds of millions of dollars for both Iran and al-Samarra’i. "Iraq cannot become a safe haven for terrorists, which is why the United States is working to counter Iran’s influence in the country," said Secretary of the Treasury Scott Bessent. "By targeting Iran’s oil revenue stream, Treasury will further degrade the regime’s ability to carry out attacks against the United States and its allies. We remain committed to an oil supply free from Iran and will continue our efforts to disrupt the ongoing attempts by Tehran to evade U.S. sanctions."
This action follows previous OFAC measures taken on July 3, 2025, against another network led by Salim Ahmed Said that also smuggled blended Iraqi and Iranian oil. These steps are part of a broader effort under National Security Presidential Memorandum-2 and Executive Order 13902 aimed at curbing Iran's economic activities related to petroleum and petrochemicals.
Al-Samarra’i operates his network through two UAE-based companies: Babylon Navigation DMCC (Babylon), which manages logistics and shipping; and Galaxy Oil FZ LLC (Galaxy Oil), which handles trading on global markets. The vessels used for these operations include several Liberia-flagged ships managed by Babylon but registered under Marshall Islands-based shell companies such as Tryfo Navigation Inc., Keely Shiptrade Limited, Odiar Management S.A., Panarea Marine S.A., and Topsail Shipholding Inc.
To conceal their activities, these vessels conduct ship-to-ship transfers—sometimes at night—and use techniques like Automated Identification System spoofing or creating gaps in location reporting. The goal is to distance themselves from direct ties with sanctioned Iranian entities while moving significant volumes of oil internationally.
As a result of today’s designations under E.O. 13902, all property belonging to those named that falls within U.S. jurisdiction or control must be blocked and reported to OFAC. Entities owned 50 percent or more by one or more blocked persons are also affected by these restrictions.
U.S. persons are generally prohibited from engaging in transactions involving designated individuals or entities unless authorized by OFAC licenses or exemptions. Violations may lead to civil or criminal penalties for both U.S. and foreign parties involved in prohibited dealings.
Financial institutions could face secondary sanctions if they knowingly facilitate significant transactions for designated individuals or organizations connected with these activities.
OFAC states that its enforcement aims not only at imposing penalties but ultimately encouraging changes in behavior among sanctioned parties.
