Trump hits Iran's pocketbook as he dangles a carrot in Middle East speech

Officials said the Iranian government allocates billions of dollars worth of oil annually to its armed forces to supplement budget allocations, underwriting the development of ballistic missiles and unmanned aerial vehicles, and financing regional terrorist groups. 

Treasury Department officials said Iran's Armed Forces general staff and its main commercial affiliate, Sepehr Energy Jahan Nama Pars Company, continue to establish front companies and rely on buyers and facilitators to enable their sanctioned oil trade. 

Sepehr Energy often carries out its oil shipments through a series of "deals" between multiple front companies that it owns or controls, according to the Treasury Department, creating the "illusion of non-sanctionable trade between separate entities." 

"Many of the entities involved in Sepehr Energy's oil shipments are part of an elaborate system of oil smuggling and money laundering, directly controlled by or acting on behalf of Sepehr Energy," the Treasury Department said, adding that it also controls Hong Kong-based front companies and uses them to "broker and receive shipments of Iranian oil delivered to independent so-called teapot refineries in China."  

The sanctions came shortly after Trump delivered a speech in Riyadh, Saudia Arabia, urging Iran to take a "new and a better path." The Trump administration is in talks with Iran for a new nuclear deal. 

The president, during his speech, though, warned of "massive maximum pressure" if Iran does not come to an agreement. 

"As I have shown repeatedly, I am willing to end past conflicts and forge new partnerships for a better and more stable world, even if our differences may be profound," Trump said. "If Iran's leadership rejects this olive branch... we will have no choice but to inflict massive maximum pressure, drive Iranian oil exports to zero."

"Iran can have a much brighter future, but we will never allow them to threaten America and our allies with terrorism or a nuclear attack," Trump said. 

Trump had announced a 60-day time frame to reach an agreement with Iran over its illegal atomic weapons program. The first U.S. negotiating session with Iran commenced April 12. 

Trump's special envoy Steve Witkoff met with Iranian officials for a fourth round of nuclear talks over the weekend. 

The nuclear talks were "difficult but useful," Iranian Foreign Ministry spokesperson Esmail Baghaei said. A U.S. official, speaking on condition of anonymity to discuss the closed-door negotiations, offered more, describing the talks as being both indirect and direct, The Associated Press reported.

The Trump administration has said the flawed 2015 Obama-era Joint Comprehensive Plan of Action (JCPOA), also known as the Iran nuclear deal, did not prevent Iran from building an atomic bomb. 

Before leaving for his trip to the Middle East, Trump reiterated his stance on Iran's nuclear goals. 

A day before the start of talks, Iranian Supreme Leader Ali Khamenei welcomed chants of "Death to America" in Iran's capital, Tehran. 

"Your judgment is right," Khamenei told a crowd of supporters who called for the destruction of the U.S.

The Associated Press contributed to this report.