Overview
The Sanctions Update, compiled by attorneys from Steptoe’s award-winning International Regulatory Compliance team and the Stepwise: Risk Outlook editorial team, publishes every Monday. Guided by the knowledge of Steptoe’s industry-leading International Trade and Regulatory Compliance team, the Sanctions Update compiles and contextualizes weekly developments in international regulatory enforcement and compliance, as well as offers insights on geopolitical context, business impacts, and forthcoming risks.
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The Lede
The US Ramps Up Pressure on Iran, Sanctions from Other G7 Members Appear Imminent
The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) on Thursday imposed a new round of sanctions targeting Iranian officials and entities in response to the current wave of anti-government protests in Iran. These measures are one part of President Trump’s response to the Iranian uprising, including directly threatening 25% secondary tariffs on any country conducting business with Iran in response to Iran’s killing of protestors. Although the Iranian uprisings appear to have been quelled for the moment, the international community and the White House are poised to intensify pressure on the potentially vulnerable regime, with sanctions a potent avenue to apply pressure, as the potential for military escalation has abated.
The protests, which began on December 28 in response to Iran’s collapsing currency and soaring inflation, have quickly evolved into broader criticism of the regime. The movement has been one of the most serious challenges to the Iranian government since the 1979 revolution, with demonstrations in every province of the country openly challenging Supreme Leader Ali Khamenei and demanding political reform. The full extent of the violence used by Iran’s security forces to suppress protests remains unclear, as a nationwide telecommunications blackout has been in place since January 8. Large-scale protests, however, appear to have largely subsided. Reports indicate violence carried out by government forces has resulted in thousands of deaths, with estimates ranging from 4,000 to 20,000.
Thursday’s sanctions are part of Washington’s broader response to the Iranian government’s crackdown on protesters. President Trump has quietly walked back threats made earlier this month of US military strikes—or other measures such as cyberattacks—against Iran. While the administration never officially explained why strikes were not launched last week, President Trump’s references to reports that the Iranian government had stopped killing civilians have been presented publicly as the reason. Meanwhile, other reports suggest the US did not have sufficient forces in the region to conduct a viable operation or respond to any retaliatory strikes. The administration, however, has not ruled out future military action, reiterating that all options remain available to President Trump despite domestic and international pushback.
With military action on standby, the US has turned to economic pressure. Secretary of the Treasury Bessent stated that “Treasury will use every tool to target those behind the regime’s tyrannical oppression of human rights.” OFAC designated five senior Iranian security officials—including the Secretary of the Supreme Council for National Security—for their role in suppressing protests, noting that they “bear responsibility for the thousands of deaths and injuries.” In addition, OFAC sanctioned 18 individuals and entities alleged to be involved in laundering Iranian oil to foreign markets on behalf of Iran’s network of sanctioned financial institutions. These include eight UAE-based entities, two Iran-based entities, six officials who lead the Iranian companies, one UK-based entity, and one Singapore-based entity. The sanctions are imposed pursuant to Executive Orders 13876, 13553, and 13902. OFAC also designated Fardis Prison for its “cruel, inhuman, and degrading treatment” of women, pursuant to the Countering America’s Adversaries Through Sanctions Act (CAATSA).
These sanctions come as President Trump considers a 25% secondary tariff on countries conducting business with Iran, effective immediately. Although the administration has yet to define what qualifies as “doing business” with Tehran, the announcement has already drawn criticism from Iran’s key trading partners. Chief among them is Beijing, Iran’s largest trading partner since 2016, which is estimated to have imported about 80% to 90% of Iran’s oil last year despite repeated warnings from Washington. If applied, the tariff could undermine the fragile US-China trade truce struck in late October 2025.
Whether these secondary tariffs will significantly alter Tehran’s behavior remains uncertain, given that Iran is already one of the most heavily sanctioned countries in the world. Years of restrictions targeting its nuclear and missile programs, support for proxy groups, and other destabilizing activities have largely cut Iran off from global markets. For Iran’s trading partners, however, the impact could be significant. Iran exported goods to 147 trading partners in 2022, albeit a small amount, and the regime remains heavily reliant on this source of revenue. Many of Iran’s trading partners are already subject to US “reciprocal” tariffs imposed since April, causing confusion for countries that have already secured trade deals with the US, like Japan and South Korea. If Washington ultimately moves forward with these tariffs, it could trigger a new wave of global trade disruption.
Meanwhile, European Commission President Ursula von der Leyen signaled last week that a fresh round of EU sanctions targeting those responsible for Iran’s violent crackdown would be proposed ahead of next Thursday’s meeting of EU foreign ministers. The measures could include listing Iran’s Islamic Revolutionary Guard Corps as a terrorist organization—a step the US took in 2019 and has pushed the EU to follow. The UK has also announced it intends to introduce additional sanctions and sectoral measures on Iran, including targeting its finance, energy, and transport industries. Strengthened EU and UK sanctions packages would underscore a continuation of renewed convergence among Western governments on escalating pressure against the Iranian regime. Washington’s unilateral 2018 withdrawal from the Joint Comprehensive Plan of Action (JCPOA) strained transatlantic coordination on Iran sanctions, but Europe has hardened its stance on Iran in recent years as well, resulting this fall in the reapplication of UN sanctions via the JCPOA “snapback” mechanism after Iran ceased coordination with the IAEA.
US Developments
US Imposes New Sanctions on Iran Amid Crackdown on Protests
On January 15, OFAC announced sanctions against senior Iranian security officials it said were the “architects of the Iranian regime’s brutal crackdown on peaceful demonstrators.” OFAC also designated 18 individuals and entities that allegedly play critical roles in laundering proceeds from Iranian petroleum and petrochemical sales as part of a “shadow banking” network.
OFAC also took action against individuals, entities, and vessels it determined were providing support to Iranian terrorist proxies:
- On January 13, OFAC, in coordination with the Department of State, sanctioned the Egyptian and Jordanian branches of the Muslim Brotherhood for their support of Hamas. On the same day, the Department of State designated the Lebanese Muslim Brotherhood as a Foreign Terrorist Organization (FTO) and Specially Designated Global Terrorist (SDGT), and the group’s leader, Muhammad Hawzi Taqqosh, as an SDGT. The designations follow an executive order (E.O.) issued by President Trump on November 24, 2025, which called for certain branches of the Muslim Brotherhood to be designated as FTOs and SDGTs.
- On January 16, OFAC designated 21 individuals and entities, and identified one vessel as blocked property, that OFAC alleges to have transferred oil products, procured weapons and dual-use equipment, and provided financial services for Ansarallah, an FTO and SDGT more commonly referred to as the Houthis. These included individuals and entities in Yemen, Oman, and the United Arab Emirates (UAE).
Protests have erupted across Iran over the past three weeks, largely a result of the rapidly weakening value of the rial, Iran’s currency, and soaring inflation. Reports indicate that thousands, potentially tens of thousands, have died in the violent crackdowns against the protests. President Trump has repeatedly expressed support for the protestors and warned that perpetrators of violence would pay a “big price.” The US may continue to sanction the Iranian regime, its terrorist proxies, and their supporters in the coming days and weeks. Iranian elites have reportedly wired large sums of money out of the country, which Secretary of the Treasury Scott Bessent said the Treasury Department will trace.
US Extends License for Sale of Lukoil’s Assets
On January 14, OFAC issued General License (GL) 131B, “Authorizing Certain Transactions for the Negotiation of and Entry Into Contingent Contracts for the Sale of Lukoil International GmbH and Related Maintenance Activities.” The license replaces GL 131A, which was set to expire on January 17, and extends its term until February 28. More specifically, GL 131B extends the authorization for certain transactions prohibited by EO 14024 that are ordinarily incident and necessary to the negotiation of and entry into contracts with Lukoil or any of its affiliates for the sale, disposition, or transfer of Lukoil International GmbH (“LIG”) or any entities it owns 50 percent or more.
Lukoil has reportedly fielded interest from a variety of potential buyers, including Carlyle, UAE-based International Holding Company, Saudi Arabia’s Midad Energy, and a joint bid from Chevron and Quantum Capital Group. The assets, which include retail gas stations, refineries, and oil fields, are worth approximately $22 billion.
UK Developments
UK Lowers Oil Price Cap on Seaborne Russian Crude Oil
The UK has announced a further reduction to the Oil Price Cap on seaborne Russian crude oil, acting in coordination with the EU. The cap will be lowered from $47.60 to $44.10 per barrel, taking effect at 23:01 GMT on January 31, 2026. The measure applies across all services caught by the Oil Price Cap, including maritime transportation, brokering, and the provision of financial services or funds linked to the maritime transport of Russian crude from Russia to third countries or between third countries. The change is intended to further restrict Russian oil revenues while maintaining alignment with allied sanctions frameworks. To allow businesses time to adjust, contracts entered into before 23:01 GMT on January 31, 2026, that comply with the existing $47.60 cap may benefit from a wind-down period ending at 22:59 BST on April 16, 2026, after which point the lower cap will apply from February 1, 2026. The UK has updated its Oil Price Cap guidance, General Licence INT/2024/4423849 (the “Oil Price Cap GL”), and FAQs 154 to 161 to support industry during the transition. Market participants must continue to comply with existing reporting and attestation obligations under the Oil Price Cap GL, and UK businesses involved in shipping, insurance, finance, or trading should review contracts and compliance processes in light of the revised cap.
EU Developments
EU court Advocate General opinion in National Settlement Depository appeal on meaning of support for the Russian Government
Advocate General Medina (the Latvian AG) has published her non-binding opinion in Case C-801/24, the Russian National Settlement Depository’s appeal against the General Court’s judgment (Case T-494/22) to uphold its original listing and relisting on the EU sanctions list under Regulation (EU) 269/2014.
The opinion addresses the interpretation of Article 3(1)(f) which allows the listing of people/entities “supporting, materially or financially, … the Government of the Russian Federation”. The opinion confirms that “support” is not limited to direct supply of material resources, but any support that, by its quantitative or qualitative importance, is capable of providing the Russian Government with resources or facilities enabling it to pursue its actions to destabilize Ukraine. Accordingly, the opinion finds that NSD’s designation was not disproportionate.
EU to lower price cap on Russian oil from $47.60/bbl to $44.10/bbl starting on February 1
The Council of the EU has decided to lower the price cap on Russian oil, above which EU companies are prohibited from being involved in its transportation and providing associated services, from $47.60 per barrel to $44.10 as of February 1. The price cap will be subject to regular review every six months by the Commission, although extraordinary reviews are possible where duly justified by developments in the oil markets or other unforeseen circumstances.
EU renews Guatemala sanctions regime for one year
The EU Council of the EU has renewed targeted measures imposed by the EU against those responsible for actions undermining democracy, the rule of law, and the peaceful transfer of power in Guatemala for one year, until 13 January 2027. Currently, these EU restrictive measures apply to eight individuals and one entity.
Asia-Pacific Developments
Private Sector Stakeholders Urge Easing of Seoul’s Sanctions on North Korea
On January 14, 2026, a group of South Korean companies with investments in inter-Korean economic cooperation projects publicly called on the government to lift the unilateral sanctions that have blocked most cross‑border commercial activity with North Korea. Representatives from ten investor organizations, including groups tied to the Kaesong Industrial Complex and the Mount Kumgang tourist zone, stated that the measures have effectively cut off all lawful avenues for private‑sector engagement with North Korea and left long‑standing ventures dormant. They noted that the restrictions, first enacted following the 2010 sinking of the South Korean naval vessel Cheonan, have continued to impede economic cooperation despite North Korea’s growing exchanges with China and Russia, and urged the government to reopen channels that would permit businesses to resume authorized activities.
Sanctions Relief Identified as Key Requirement for North Korea’s Reengagement with the United States
On January 17, 2026, former US nuclear envoy Joseph Yun said at the South Korea-US Alliance conference that North Korea would likely condition any return to talks with Washington on securing sanctions relief and achieving a level of de facto acceptance of its nuclear arsenal. Yun added that, despite continued US interest in engagement, North Korean leader Kim Jong-un appears unwilling to resume negotiations, pointing to factors such as Pyongyang’s overseas troop deployments, cyber-enabled revenue generation, and lingering frustration from the 2019 Hanoi summit. He emphasized that South Korea remains indispensable to any diplomatic progress, stressing that the United States cannot pursue meaningful talks with Pyongyang without Seoul’s involvement.
Malaysia Balances Iran Ties Against United States Sanctions Pressure
On January 20, 2026, Malaysian Prime Minister Anwar Ibrahim stated that Malaysia would continue its diplomatic relations with Iran, despite Tehran remaining subject to extensive US sanctions and a new warning from Washington that countries engaging economically with Iran could face a 25 percent import tariff. Malaysia does not conduct direct trade with Iran and instead relies on intermediaries due to existing US sanctions. Anwar told Parliament that he had already communicated with Iranian officials and stressed the need for Malaysia to act with “wisdom in international relations,” adopting a measured approach that preserves national interests while managing the evolving United States posture.
