OFAC (the Office of Foreign Assets Control) is a unit of the U.S. Treasury that administers and enforces U.S. economic and trade sanctions. When OFAC “designates” a person, company, or vessel, it puts them on a sanctions list (usually the SDN List), which means: (1) any of their property or interests in property that are in the United States or held by U.S. persons must be frozen (blocked) and reported to OFAC; and (2) U.S. persons are generally prohibited from doing business with them unless OFAC grants a specific license.
The SDN List (Specially Designated Nationals and Blocked Persons List) is OFAC’s main public list of sanctioned individuals, companies, ships, and other entities. U.S. persons (including banks and companies) are generally prohibited from dealing with anyone on the SDN List, and any of their property that comes under U.S. jurisdiction must be blocked. In practice, international banks and companies screen their customers, transactions, and counterparties against the SDN List; if a match is found, they must freeze assets or reject the transaction to avoid U.S. sanctions exposure, and many foreign firms avoid SDNs entirely so they don’t lose access to the U.S. financial system.
Executive Order 13902 authorizes the Treasury Secretary (in consultation with the Secretary of State) to: (1) block the U.S. property of persons who operate in specified sectors of Iran’s economy (originally construction, mining, manufacturing, textiles, and any other sector designated later, such as the petroleum and petrochemical sectors), or who provide major support or services to such persons; and (2) impose “secondary sanctions” on foreign financial institutions that knowingly conduct significant transactions for those sectors or for persons blocked under the order, including restricting or cutting off their U.S. correspondent and payable‑through accounts. These tools are what Treasury is using to sanction Iran’s petroleum/shipping networks in this action.
Hatem Elsaid Farid Ibrahim Sakr is an Egyptian shipping businessman based in the UAE who owns and operates multiple maritime and oil‑trading firms, including Red Sea Ship Management LLC and High Seas Petroleum LLC (formerly Petrofleet Energy Trading LLC). According to OFAC, his companies have transported large quantities of Iranian petroleum in the Persian Gulf region, including in coordination with Iranian Ministry of Defense front company Sahara Thunder, so he and his firms have been sanctioned under E.O. 13902 for operating in Iran’s petroleum sector. Sahara Thunder is an Iran‑based front company for the Iranian Ministry of Defense and Armed Forces Logistics (MODAFL) that manages commercial activities such as illicit oil sales and related shipping; U.S. Treasury has described it as MODAFL’s main front company and as part of networks that support Iranian military programs and exports (including drones) as well as sanctioned oil shipments.
In a ship‑to‑ship (STS) transfer, two tankers meet at sea, come alongside each other, and use hoses and pumps to move oil or fuel from one vessel to the other. This is a legitimate maritime practice (for example, to lighten cargo before entering shallow ports), but in sanctions‑evasion schemes it is often done in remote waters, at night, or just outside port limits. Sanctions evaders use STS transfers to hide the true origin of cargo by moving Iranian oil onto another ship, sometimes combined with turning off or spoofing location transmitters (AIS) and falsifying paperwork, so that the receiving ship can present the cargo as coming from a different country or an unremarkable voyage.
When a vessel or firm becomes “blocked property,” U.S. companies and banks must treat any property or interests in property of that party under U.S. jurisdiction as frozen and cannot release or move it without OFAC authorization. Practical steps include: (1) sanctions screening: updating internal screening lists so customers, ships (by name and IMO number), and counterparties hit against the new designations; (2) blocking or rejecting: immediately blocking any accounts, payments, or contracts involving the blocked party (funds are placed in a blocked account) and stopping new dealings; (3) reporting: filing an initial blocked‑property report with OFAC within 10 business days and then submitting annual reports while the property remains blocked; and (4) applying the “50 Percent Rule,” meaning they must also treat as blocked any entity that is, directly or indirectly, 50% or more owned by one or more blocked persons, even if that entity is not separately named.
Foreign entities that continue to deal with designated vessels or companies risk both direct and “secondary” U.S. sanctions. Under E.O. 13902 and related Iran programs, the Treasury Secretary can: (1) add non‑U.S. companies, ship owners, or individuals to the SDN List, which effectively cuts them off from the U.S. financial system and most dollar transactions; and (2) impose correspondent‑account or payable‑through‑account restrictions on foreign financial institutions that knowingly conduct significant transactions for Iran’s sanctioned sectors or for blocked persons, which can severely limit their ability to do business in the United States. OFAC also notes that both U.S. and foreign persons can face civil penalties on a strict‑liability basis, and, in serious cases, criminal penalties, for willful sanctions violations.