“We are committed to bringing the Iranians to going back to the 100,000 barrels a day of oil exports,” Treasury Secretary Scott Bessent said on Feb. 14. “If we get [Iran] back to Trump 1.0 levels, I think they will be in severe economic distress,” he added. While Bessent’s first statement may be too ambitious, his second is accurate.
The Iranian fiscal year begins on March 21. Each year, parliamentarians estimate both the amount of oil they must export and at what price to make payroll and break even. In the coming year, Iran envisions exporting 1.8 million barrels per day. A significant drop in Iran’s oil exports could both bust the budget and push the country into recession given Iran’s dependency on hydrocarbon exports. A recession would, in turn, suppress tax and tariff revenues, force deficit spending, and accelerate inflation — possibly triggering an economic death spiral.
Because of lax Biden administration sanctions enforcement, the Islamic Republic exported between $130 billion and $146 billion of crude oil, assuming Iranian authorities offered a 10% to 20% discount over Brent crude benchmark pricing to incentivize buyers’ risk in sanctions evasion. Furthermore, Tehran exported over $400 billion of goods and services from 2021 to 2024. Still, mismanagement has a price. Iran suffers from high inflation and faces widespread power outages, a natural gas shortage, and rapid depreciation of its currency.
When President Donald Trump withdrew from the Joint Comprehensive Plan of Action in April 2018, he gave buyers a year to stop importing Iranian oil. In May and June 2019, Iran’s exports dropped to below 400,000 barrels per day. From May 2019 to January 2021, when maximum pressure reigned supreme, Tehran still managed to sell around 800,000 barrels of oil per day on average. To push Tehran’s oil exports back to this level would represent a 55% reduction in its expected revenue from oil exports.
Data from United Against Nuclear Iran tanker trackers show that Iran exported 1.38 million barrels per day in January. Other industry sources estimate a bit less but agree there has been between a 9% and 19% drop in exports in January 2025 compared to the average from the fourth quarter of 2024. The first indications from February imply a similar pattern, suggesting that market participants are carefully assessing what Trump and his treasury secretary are saying. However, convincing the oil smugglers to leave this lucrative business requires more than harsh words.
To date, the United States has focused on front companies and vessels involved in illicit oil trade, but it could go much further. To counter smugglers, the U.S. must target front companies that act as intermediaries to buy, sell, and transfer the money; tankers; companies that own or operate the ships; their insurers; ports and port operators; oil storage facilities; end users such as Chinese teapot refineries; and banks and other financial institutions that facilitate trade and transactions to enable the money to flow back into Iranian coffers. Treasury should furthermore designate all board members, executives, and major shareholders of firms that facilitate the sanctions-busting trade.
Many countries deal in Iranian oil, likely believing the U.S. will look the other way. In recent years, they have not been wrong. The Biden administration identified ports in 28 countries that sell Iranian crude oil and petroleum products, including not only China, the primary buyer of Iranian oil, but also Singapore, the United Arab Emirates, and Malaysia. The State Department should inform these governments U.S. tolerance is over.
TRUMP CRACKS DOWN ON IRAN’S ‘SHADOW FLEET’ WITH NEW SANCTIONS
At issue is not only the Islamist regime’s ability to prosper but regional and U.S. national security. Entities connected to the Islamic Revolutionary Guard Corps and its Quds Force dominate Iran’s illicit oil trade and directly benefit Guard terrorism. U.S. officials should treat any Guard financiers as enemy combatants in much the same way as U.S. authorities treat Islamic State or al Qaeda financiers. Using all elements of national power, including military actions, to neutralize and eliminate terrorism financiers will significantly raise the cost of smuggling Iranian oil. Furthermore, the U.S. Navy should initiate a campaign of tanker confiscations, sending an unmistakable message to Iran’s oil smugglers.
Now is the moment to tighten the noose. A full-force U.S. economic crackdown, alongside Israel’s military pressure and the Iranian people’s internal resistance, can finally push the Islamist regime into the dustbin of history where it belongs.
Mark Dubowitz is chief executive of the Foundation for Defense of Democracies, where Saeed Ghasseminejad is a senior adviser.