EU expands Iran sanctions to target Strait of Hormuz disruption

The amended sanctions framework will target individuals and entities involved in Iran’s actions and policies that “threaten navigation or prevent vessels from entering and exiting the Strait of Hormuz” in a marked expansion of the EU’s existing sanctions regime against Tehran.

Since the US and Israel launched joint airstrikes on Iran on 28 February, the Strait of Hormuz – the global maritime transit chokepoint for oil and liquefied natural gas (LNG) – has been effectively gridlocked, forcing thousands of ships to be rerouted.

These moves to expand the EU’s Iran sanctions framework extends the scope of the restrictive measures it adopted against Iran in the wake of Russia’s invasion of Ukraine in 2022. Previously, that framework permitted the EU to target both those involved in Iran’s military support for Russia’s war of aggression against Ukraine and armed groups and entities operating in the Middle East and Red Sea region.

The EU said it was introducing the new designation criteria “in response to Iran’s actions undermining the freedom of navigation in the Strait of Hormuz”. The new designation criteria, which took effect on 22 May, permit travel restrictions and asset freezes to be imposed on targeted individuals and entities.

The asset freeze prohibits EU citizens and companies from making funds, or economic resources available to, or for the benefit of, listed individual and entities, or dealing such funds / resources that are held, owned or controlled by those listed.

The announcement follows a political agreement reached by EU ministers at the Foreign Affairs Council last month. In a statement, the EU Council said Iran’s actions to date against vessels transiting through the Strait of Hormuz violated international law and that such actions “infringe upon established rights of both transit and innocent passage through international straits”.

Although no new designations have been made yet under the amended regime, sanctions law specialist Stacy Keen of Pinsent Masons said the EU’s decision to expand its existing Iran sanctions framework was significant. “The amending regulation expands the EU’s designation criteria – in other words the basis on which sanctions may be imposed on individuals and entities,” she said. “A new designation limb has been introduced to capture persons and entities responsible for, supporting, implementing, or benefiting from Iran’s actions or policies that undermine freedom of navigation in the Middle East.

As Keen notes, such designations are specifically designed to “coerce and influence those designated to change behaviours and influence change – in this case to support free navigation”, making the EU’s intentions all too clear.

She added: “Under the regulation, sanctions are applied through formal designation, whereby individuals or entities are listed in its annex – these persons are referred to as ‘designated persons’. The application of the relevant sanctions extends beyond those expressly listed: entities owned or controlled by designated persons are also subject to the same restrictions.”