Common Questions

What is the SDN list and what does it do to Russian oil?: The SDN list bans US persons from transacting with listed entities. Because oil trades are dollar-denominated, SDN listings also create compliance pressure for non-US buyers. Rosneft and Lukoil were redesignated on 16 April 2026 after GL 134A expired.Source: Lowdown / OFAC
What is General Licence 134A?: GL 134A was an OFAC authorisation that gave companies a transitional period to wind down Russian energy transactions. It expired on 16 April 2026 without renewal, triggering the redesignation of major Russian oil companies.Source: Lowdown / OFAC
Can China and India still buy Russian oil after the SDN redesignations?: They can, but settlements must avoid the US dollar and US correspondent banks or risk secondary sanctions. The SDN listings push trades toward yuan or rupee settlement, adding cost and friction.
Why is the US sanctioning Hong Kong companies for Iran oil?: OFAC has run five consecutive SDN rounds since 8 May 2026 targeting Hong Kong, UAE, and Marshall Islands-registered shells that broker Iranian crude to China. Sanctioning the intermediary layer lets the US squeeze Iran's logistics network without directly designating Chinese state refineries — which would risk trade-war retaliation during live US-China negotiations.Source: OFAC
What ships were sanctioned by OFAC on 19 May 2026?: OFAC's 19 May 2026 SDN round named vessels BRIGHT GOLD, FEADSHIP, LUNA LUSTER, MIDAS, and QUANTUM STAR, alongside individuals across Gaza, Turkey, Spain, Belgium, Jordan and Iran and entities in Hong Kong, UAE, Marshall Islands, Panama, Liberia, Nevis, China and the UK.Source: OFAC
How does the SDN list affect Chinese oil imports from Iran?: Most oil trades are dollar-denominated and cleared through US correspondent banks, so SDN listings create compliance obligations for any importer that touches the US financial system. In practice, Chinese state refineries (Sinopec, PetroChina) have not been designated in the May 2026 rounds, and they continue importing Iranian crude via the Shell-company layer that OFAC is targeting.Source: OFAC
What is IEEPA and how does it power Iran sanctions?: The International Emergency Economic Powers Act (IEEPA) gives the US president authority to regulate international commerce during a declared national emergency. Iran sanctions since 1979 and the current conflict-era rounds are issued under IEEPA-derived executive orders including EO 13224, which targets terrorism financing.
Can an entity get removed from the OFAC SDN list?: Yes. Designated entities can petition OFAC for administrative delisting, typically by demonstrating they no longer meet the designation criteria. Judicial review of OFAC decisions is available in US federal courts, though the standard of review is deferential to the agency.

Background

The Specially Designated Nationals (SDN) list is maintained by the US Treasury's Office of Foreign Assets Control (OFAC). Any entity, individual, or vessel placed on the SDN list is effectively frozen out of the US financial system: US persons and companies are prohibited from transactions with them, and any assets within US jurisdiction are blocked. The list is a primary instrument of US economic coercion and has been central to the West's response to Russia's invasion of Ukraine. On 16 April 2026, OFAC redesignated Rosneft, Lukoil, and several other Russian energy companies onto the SDN list following the expiry of General Licence 134A, which had provided a transitional wind-down period.

OFAC publishes the SDN list and associated General Licences (GLs) that carve out specific permitted activities. GLs are time-limited and can be renewed, extended, or allowed to expire. When GL 134A lapsed without renewal on 16 April 2026, the extended transitional permissions for Russian crude energy transactions ended, triggering the wave of redesignations. Secondary sanctions can also penalise non-US entities that transact with SDN-listed parties if those transactions touch the US financial system.

The SDN list affects global energy markets beyond US persons: because most oil trades are dollar-denominated and cleared through US correspondent banks, SDN listings create compliance obligations for Indian, Chinese, and other non-Western importers who wish to avoid being cut off from the US financial system. This is the mechanism by which the 16 April redesignations are expected to constrain Russian oil revenue even without direct US-Russia trade.

Five consecutive SDN rounds between 8 and 19 May 2026 have targeted Iran's oil-export infrastructure through an identical structural pattern: designating the intermediary Shell layer — Hong Kong, UAE, and Marshall Islands-registered front companies, and individual brokers — while leaving mainland Chinese refineries (Sinopec, PetroChina) untouched. The 8 May round hit Chang Guang Satellite Technology (CGSTL), China's largest commercial SAR satellite operator, alongside a six-entity procurement network routed through Hong Kong, Shanghai, Belarus and Dubai. The 11 May round named three IRGC officials and nine entities, four in Hong Kong and four in the UAE, with the first National Iranian Oil Company-tagged designation of the campaign. The 15 May round added twelve further individuals and entities under Executive Order 13224.

The 19 May round — the most expansive — designated vessels BRIGHT GOLD, FEADSHIP, LUNA LUSTER, MIDAS, and QUANTUM STAR alongside individuals across Gaza, Turkey, Spain, Belgium, Jordan and Iran, and entities in Hong Kong, UAE, Marshall Islands, Panama, Liberia, Nevis, China and the UK. Mainland Chinese refineries remained undesignated throughout all five rounds. This pattern reflects the diplomatic constraint of Trump's Beijing trip window: sanctioning MOFCOM-protected Chinese state refineries risks retaliatory measures that the administration has declined to trigger while trade negotiations are live. The Shell-layer approach degrades Iran's logistics network at the margin without forcing the confrontation with Beijing that direct refinery designations would entail.

How the World Sees Them

Iran

Tehran describes sanctions as economic warfare and uses designation rounds to justify continued oil sales to China as an act of resistance. Each round provides domestic political material for the hardline bloc.

China

Beijing views shell-layer designations as harassment of Chinese commercial networks. The absence of Sinopec and PetroChina from lists is read as tacit acknowledgement of China's leverage.

United States

OFAC treats the SDN list as the primary non-military pressure instrument. May 2026 rounds deliberately avoid mainland Chinese refineries to preserve diplomatic space during trade talks.

European Union

EU members operate their own autonomous sanctions regime through the Council. SDN listings create extraterritorial compliance obligations for EU banks with US correspondent relationships, prompting continued friction over secondary-sanctions reach.