Oil Exports, an Important Component of Iran’s Funding for Terrorism

Overview^[1]

• For over four decades Iran has been considered the world’s leading sponsor of terrorism, with the regime in Tehran using the Qods Force of the Revolutionary Guards to directly support a range of proxy organizations operating against the United States, Israel and pro-Western Arab states across the Middle East. According to estimates, Iran provides hundreds of millions of dollars annually in financial assistance to Hezbollah in Lebanon, Hamas in the Gaza Strip, the Houthis in Yemen and the Shi’ite militias in Iraq.
• The Iranian regime’s main source of revenue is its energy sector, which generates about half the country’s export income. Iran’s security bodies receive state allocations of oil which they are expected to sell themselves, and the profits from the sales are used to fund their own operations and those of affiliated terrorist organizations.
• The United States has imposed sanctions on Iran with the objective of restricting its ability to sell oil on international markets. In an effort to circumvent the sanctions, Iran operates a complex network of intermediaries, front companies, and “shadow fleet“ of tankers.
• With the formation of the Trump administration at the beginning of 2025, the United States renewed its “maximum pressure” policy on Iran, which had been in effect during Trump’s first term between 2018 and 2020. In recent months, the United States has worked to tighten the sanctions while exposing dozens of entities involved in Iran’s illegal oil trade.
• At the same time, Iranian opposition elements have exposed dozens of companies, individuals and financial entities involved in Iran’s sanction-evasion operations. The exposures reflect the extensive scope of Iran’s illegal activities and provide a broad foundation for expanding the campaign against Tehran’s attempts to evade American sanctions.
• The aim of this report is to shed light on how the Iranian security bodies use the illegal oil trade to finance support for terrorist organizations across the Middle East, as well as the entities assisting them. It can be assumed that a focused application of sanctions targeting Iran’s ability to export oil could yield two achievements, namely increasing economic pressure on Iran as part of the “maximum pressure” strategy and directly undermining the financing the support and military buildup of the terrorist organizations loyal to the Tehran regime.

Background Information

• Iran is considered the world’s leading state sponsor of terrorism, with an estimated annual spending of about $700 million to support terrorist organizations, including Hezbollah, Hamas, the Palestinian Islamic Jihad (PIJ) and the Shi’ite militias in Iraq. The Qods Force of the Revolutionary Guards is the main Iranian body leading financial and material support for the groups (United States Department of State 2019 Terrorism Report).
• To fulfill the budget required for Iran’s overall security activity, and specifically to fund the terrorist activity of its proxies in the Middle East, Iranian security agencies rely on oil revenue, which was estimated at $53 billion in 2023, about half of total exports (United States Department of Energy Information Administration, October 10, 2024). Although the National Iranian Oil Company holds a monopoly on oil production, the state grants allocations to government ministries, religious institutions and pension funds to sell oil to finance their activities. Iran’s military-security institutions, including the General Staff of the Armed Forces, the Revolutionary Guards and the Qods Force, also benefit from the system and rake in billions of dollars from oil sales for their own budgets (The Economist, October 17, 2024).

The “Maximum Pressure” Campaign and Iran’s Efforts to Evade It

• In November 2018, during Trump’s first term as United States president, the administration launched the “maximum pressure” campaign on Iran after Trump withdrew from the 2015 nuclear deal. The objective of the campaign was to exert economic and political pressure on Iran to compel the regime in Tehran to agree to a renewed nuclear agreement on terms favorable to the West and to alter Iran’s regional influence, its support for terrorist organizations across the Middle East and its missile program. The main component of the campaign was the imposition of significant economic sanctions to cripple Iran’s key economic sectors, especially banking and oil. As a result, Iran’s oil revenues dropped sharply, from an annual average of $70 billion (2000–2017) to $12.4 billion in 2019 and $4 billion in 2020 (Council on Foreign Relations, July 12, 2021).
• Under President Joe Biden (2020–2024), the American administration maintained sanctions on Iran but eased the implementation of the “maximum pressure” campaign. As a result, Iran’s oil revenues rebounded, reaching $53 billion in 2022 and $54 billion in the following year (United States Department of Energy Information Administration, October 13, 2024).
• In an effort to circumvent the American-led sanctions, Iran deploys its security bodies, headed by the Revolutionary Guards, to operate vast, independent facilities which enable evasion at all stages of oil export, from loading it onto tankers and shipping it, mainly China, to laundering the revenues from the sales. Experts estimate the Revolutionary Guards control up to half of all Iranian oil exports through a complex network of intermediaries, shell companies and a “shadow fleet” of tankers for transporting oil to buyers (The Economist, October 17, 2024; Reuters, December 18, 2024).
• In early February 2025, about two weeks after returning to the White House, Trump signed an executive order reinstating the “maximum pressure” campaign against Iran, in order to block Iran’s ability to develop nuclear weapons and to confront its subversive activities abroad. According to the order, the Secretary of State was instructed to adjust or revoke existing sanction waivers and coordinate with the Secretary of the Treasury to reduce Iranian oil exports to zero (White House, February 4, 2025). Since the resumption of the campaign, the United States Treasury Department has announced sanctions against individuals and entities involved in Iranian oil smuggling networks which fund the Islamic Republic’s military activity and in particular, its terrorist operations across the Middle East, amounting to billions of dollars annually (United States Treasury Department, February 6 and May 13, 2025).

Sepehr Energy Jahan as a Case Study

• An example of United States efforts to combat Iranian oil exports used for terrorism is the action against Sepehr Energy Jahan Nama Pars (Sepehr Energy Jahan), a front company operated by the Iranian Armed Forces’ General Staff. In November 2023, the United States Treasury designated the company as a terrorism supporter due to its financial and material assistance to Iranian security entities. Sanctions were also imposed on its CEO Majid Azami, one of the employees and companies in Hong Kong and the UAE which sold oil on behalf of the Iranian firm (United States Treasury Department, November 29, 2023).

• Regardless, Sepehr Energy Jahan continued exporting oil, and by early 2025 had expanded its activities in an effort to generate additional revenue for security buildup. The company was involved in releasing oil reserves totaling 52 million barrels worth $1.7 billion from the ports of Dalian and Zhoushan in China, which had been held since United States Treasury Department sanctions were imposed in 2018 (WikiIran, May 2025).
• In addition, Sepehr Energy Jahan and its director Azami were revealed to be involved in an Iranian effort to release $1.7 billion in frozen funds held at the Clearstream holding company in Luxembourg, which was also under United States sanctions (Der Spiegel, March 6, 2025). The company also managed to increase its share of Iran’s security-related oil exports, exporting oil worth $4 billion in the past year, approximately 60% of Iran’s total security oil exports.
• In response to Sepehr Energy Jahan’s expanded operations and growing oil exports, the United States Treasury Department declared the company a “global network transporting Iranian oil and funding the Iranian armed forces along with terrorist activity.” In May 2025, it imposed sanctions on 24 entities involved in the company’s oil exports, including tankers, Iranian front companies and foreign entities which enabled Iran to export oil in violation of the sanctions. The measure was presented as an effort to curb Iran’s military buildup, including its missile and drone programs, as well as its negative regional influence (United States Treasury Department, May 13, 2025).

     
List of entities designated as linked to Sepehr Energy Jahan
(United States Treasury Department, May 13, 2025)

• In addition to the entities designated by the United States Treasury Department, this report identified other entities, including companies and tankers, used by Sepehr Energy Jahan to circumvent American sanctions and continue funding terrorist activity. For the full list, see Appendix A.

The Role of the Iranian Opposition in Exposing Other Companies Involved in Evading Sanctions

• Alongside the United States campaign to curb Sepehr Energy Jahan’s oil exports, actions have also been taken against the company by opponents of the Iranian regime. For example, a “hacktivist” group affiliated with the Iranian opposition called PRANA attacked the company’s email servers and leaked large amounts of data to the Darknet.
•   The leak included thousands of documents and email correspondence detailing Sepehr Energy Jahan staff activities. Among the disclosures were documents about loading oil onto tankers, oil purchase contracts by Chinese clients and invoices from front companies used to process payments. The materials also exposed shell companies used by Iran to conceal financial beneficiaries, the end customers who bought the oil, bank accounts, service providers which enabled the exports and names of tankers operated by Sepehr Energy Jahan to transport the sanctioned oil (ICNA, April 2025).

Appendix A: Entities Assisting Sepehr Energy Jahan

Names of the Companies

Names of the Tankers

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