US sanctions target Iran's auto, rail sectors as blockade chokes ship lanes

By Timothy Gardner

WASHINGTON, Oct 1 (Reuters) - The Trump administration imposed sanctions on Iran's rail and auto sectors and their foreign suppliers, the Treasury Department said on Thursday, widening its wartime economic campaign to isolate Tehran.

The sanctions are part of the department's "Operation Economic Outcast," announced August 24, which aims to cut Tehran's funding for the war, missile construction, cyberattacks and theIslamic Revolutionary Guard Corps or IRGC.

The move extends US economic pressure on Iran from sea to land, targeting sectors Tehran has leaned on since a naval blockade cut off its oil shipments through the Strait of Hormuz. But the expanding sanctions risk inflicting severe costs on ordinary Iranians, one analyst said.

The US blockade of Iranian ports has forced Tehran to rely more on autos and rail for transporting petroleum, fertilizer, chemicals and other goods. Thursday's sanctions target those alternatives, according to the Treasury Department.

The sanctions designate IranKhodro Company, or IKCO, and SAIPA Iranian Automobile Manufacturing Company, or SAIPA. Treasury said the two companies represent more than 90% of Iran's domestic auto market.

Treasury also designated the state-owned Islamic Republic of Iran Railway Company, which provides passenger and freight services, the Raja Passenger Trains Company andSherkat-E Rah Ahan-E Khamle-O-Naghle, also known as the Railway Transportation Company, which it said is a top private freight line.

Treasury Secretary Scott Bessent said the action "directly targets Iran’s enablers and lays the groundwork for the United States and our partners to drain the regime’s revenue once and for all."

Thursday's sanctions also target foreign companies in Indonesia, the UAE and Turkey that supply Iran's auto industry.

"The blockade squeezed Iran at sea, sanctions increasingly isolate it by air, and now Washington is constricting its economic arteries on land," saidBrett Erickson, a sanctions expert and ⁠managing principal at Obsidian Risk Advisors. "You cannot choke an economy like this without choking the livelihoods of the people who depend on it."

(Reporting by Timothy Gardner, Doina Chiacu and Daphne Psaledakis; editing by Michelle Nichols and Sanjeev Miglani)