On October 1, the US Treasury Department implemented new sanctions against Iran's railways, automotive groups, and overseas suppliers under the "Economic Exile Action," designating the automotive and railway sectors as subject to comprehensive sanctions under Executive Order 13902. The State Department stated that the action targets networks in the Middle East, East Asia, and Europe that assist in evading sanctions.

The named automotive entities include Iran Khodro and SAIPA, which together account for over 90% of Iran's domestic automotive market. Also included are Iran Khodro Diesel, Pars Khodro, Zamyad, as well as Niroo Motor Shiraz and Niroo Motor Damavand. The Treasury Department noted that the automotive industry is deeply intertwined with the Islamic Revolutionary Guard Corps (IRGC), which, despite annual losses exceeding $1 billion, remains a cash source for the regime.

In the railway sector, the state-owned Islamic Republic of Iran Railway Company, passenger operator Raja Passenger Trains, and private freight operator Sherkat-E Rah Ahan-E Khamle-O-Naghle are included. The Treasury stated that after the US military's maritime blockade in the Gulf of Oman blocked shipping, Iran shifted to rail transport for oil and maintained regional trade.

Overseas suppliers include UAE's Integrated Auto Parts, Hong Kong's Hessenberg and Tanex Global Trading, Indonesia's PT Golden Motorcycle International, and Turkey's Troy Trading. The steel and machinery supply chain also includes Shanghai Ruimi, M and R Steel, and the Chinese subsidiary of Middle Eastern machinery company HEPCO. Treasury Secretary Scott Bessent stated that this move targets enablers, paving the way for the US and its partners to drain regime revenues. This action was announced on August 24, aiming to cut off funding for war, missile attacks, cyberattacks, and the IRGC.

On the same day, President Donald Trump told reporters on the South Lawn that he must make a decision: Iran must either sign a very fair agreement or it will not exist. He rejected Tehran's latest proposal, stating that only partial arrangements for the Strait of Hormuz are far from sufficient, and he would not accept conditions that were not approved a year ago, mentioning the possibility of resuming bombings after the midterm elections. Iran had previously sought to lift port blockades, exempt oil sanctions, unfreeze assets, and ceasefire.

With buyers absent, suppliers still providing parts, steel, and shipping alternatives to Iran are affected. This is event-driven financial isolation, not a spontaneous market sell-off. Dollar clearing, insurance, and correspondent banking will bypass the named entities. Beneficiaries are other oil-producing countries on alternative supply routes, while Iranian automotive cash flow, railway oil transport channels, and related traders in the UAE, Hong Kong, Turkey, and Indonesia are under pressure.

The maritime blockade has already shifted cargo flows from ships to railways. The sector designation means that entities operating in Iran's automotive or railway industry no longer need to prove their connection to the IRGC on a case-by-case basis to be subject to secondary sanctions.

Source: Public Information