Sanctions make it riskier and costlier to buy, ship, insure, finance, and pay for Iranian oil—but they have not stopped exports. Reporting cited by the Congressional Research Service (CRS) indicates that shipments remained high into early 2025, with almost all reportedly going to China. The impact is not captured by barrels shipped or gross sales alone: proceeds may be restricted or difficult to transfer, limiting the foreign currency Iran can readily use. That constraint can add pressure on the rial and prices, but sanctions are only one of several influences.
What sanctions target—and whose transactions are affected
The clearest evidence here concerns U.S. sanctions. They can expose foreign financial institutions and other non-U.S. actors to consequences for specified significant transactions involving Iranian petroleum, Iranian financial institutions, or the rial. The legal effect depends on the relevant authority, the parties and transaction involved, and whether an exception or authorization applies. It is not accurate to describe every transaction by every foreign person as categorically prohibited.
CRS explains that U.S. secondary sanctions are designed to deter foreign actors from participating in activities that would be prohibited for U.S. persons. The framework includes sanctions addressing significant transactions with designated Iranian banks, including the Central Bank of Iran, and transactions involving the purchase, acquisition, sale, transport, or marketing of Iranian petroleum. It has also included country-specific exceptions under defined conditions; CRS reports that the last approved significant-reduction exception was in 2018. The rules and designations are time-sensitive, so a specific transaction requires checking current U.S. Treasury Office of Foreign Assets Control (OFAC) rules and guidance.
Exposure can reach beyond the buyer. Intermediaries, shipowners, shipping companies, financial institutions, insurers, and service providers may face sanctions risk under particular authorities. A designation is an enforcement measure, not by itself a count of all Iranian oil shipments or a judgment about every actor in the trade.
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Can Iran still sell oil under sanctions?
Yes. CRS reported that Iranian petroleum exports reportedly reached a record in the first quarter of 2024, with almost all going to China, and remained high into early 2025 despite reported disruptions. These are reported estimates, not a definitive count: concealment makes cargoes and their origins difficult to measure.
CRS says Iranian oil was reportedly sold below prevailing prices to attract traders, particularly smaller, semi-independent Chinese refineries often called “teapots.” A discount can help sustain demand, but it also means the value of barrels sold cannot be inferred from a benchmark oil price alone.
How the trade is obscured
- Origin relabeling: Traders may disguise a cargo’s Iranian origin.
- False vessel-location signals: Tankers may spoof or manipulate signals used to track their routes.
- Shadow-fleet shipping: Older vessels with difficult-to-trace ownership can make shipping and cargo movements less transparent.
OFAC’s April 16, 2025 maritime advisory describes concealment patterns and recommends risk-based diligence. OFAC reported that actions in December 2024 and February–April 2025 sanctioned 86 individuals and entities across more than 25 countries, and identified 85 tankers as blocked property involved in Iranian oil shipments and sales. Those are OFAC’s enforcement figures for the specified periods, not the total number of tankers Iran uses or an estimate of all exports.
Why oil sales do not equal money freely available to spend
Three measures need to be kept separate: barrels shipped, gross sales revenue, and funds accessible for general use. A reported revenue figure measures neither freely transferable reserves nor the government’s net income or spending capacity.
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Under arrangements covered by certain U.S. statutory exceptions, proceeds from Iranian petroleum sales may have to be credited to an account in the country with primary jurisdiction over the foreign financial institution and may not be repatriated to Iran. The funds may be restricted to bilateral trade rather than purchases from a third country. Such proceeds have economic value, but they are not equivalent to unrestricted foreign exchange that can be transferred wherever Iran chooses. These conditions apply to particular authorities and arrangements; they should not be generalized to every payment route.
Other restrictions can affect dealings with designated banks and specified foreign financial institution transactions involving the Central Bank of Iran. OFAC also explains that certain significant transactions in rial, rial derivatives, or holdings of rial-denominated accounts outside Iran can create correspondent-account or blocking-sanctions exposure. Some barter arrangements involving Iranian petroleum can also be sanctionable when a financial institution is involved; other arrangements may be exposed when they support the National Iranian Oil Company (NIOC), Naftiran Intertrade Company (NICO), or the Central Bank. Using a non-cash settlement does not automatically put a transaction outside sanctions.
In May 2026, the U.S. Treasury described exchange houses and foreign front companies as mechanisms through which sanctioned Iranian banks and associated companies receive funds from overseas oil and petrochemical sales. That release describes the networks Treasury targeted; it does not quantify how much revenue reaches Iran or how much is available for unrestricted use.
Reported sales revenue is a different measure
| Year of sales | Estimated Iranian petroleum sales revenue | Attribution and meaning |
|---|---|---|
| 2022 | $54 billion | U.S. Energy Information Administration estimate from 2024, as cited by CRS. Gross sales revenue for 2022, not a measure of accessible funds. |
| 2023 | $53 billion | U.S. Energy Information Administration estimate from 2024, as cited by CRS. Gross sales revenue for 2023, not a measure of accessible funds. |
The reviewed sources do not establish a reliable, comprehensive current percentage of oil proceeds Iran can readily spend in reserve currencies. The revenue estimates therefore cannot be used to calculate how much cash Iran can freely access.
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How restricted foreign currency can affect the rial and prices
Oil exports are an important source of foreign exchange. Sanctions can reduce the usable supply through several channels: making sales harder, lowering realized prices, restricting access to proceeds, or impeding transfers and international payment services. If less foreign currency is accessible than gross receipts imply, paying for imports and supplying currency to the market can become more difficult. That can add depreciation pressure, including in parallel markets, and widen gaps between exchange rates. A weaker rial can in turn make imported goods and inputs more expensive, contributing to inflation.
These are transmission channels, not a claim that sanctions alone determine the exchange rate. Fiscal and monetary policy, oil prices, expectations, political uncertainty, and other disruptions also matter. Inflation, fiscal deficits, and exchange-rate policy can themselves influence currency markets, so the relationship runs in both directions.
What the historical evidence shows
CRS reported that the rial’s unofficial-market value fell by about 56% between January 2012 and January 2014, a historical estimate for that market and period. CRS also reported that the rial stabilized after the 2013 interim agreement and then fell sharply amid the prospect and reimposition of U.S. sanctions in 2018. These episodes illustrate past pressure; they are not current exchange-rate figures or a universal estimate of the effect sanctions will have.
A 2022 IMF Working Paper by H. Elif Ture and Ali Reza Khazaei used Iranian quarterly data from 2004 through 2021. Its model identifies currency depreciation and fiscal deficits as inflation drivers over short and long horizons, and sanctions—proxied by oil exports—as an inflation driver over both horizons. The paper also discusses a sanctions-removal scenario in which the rial could strengthen and influence inflation. These are study findings and model-based relationships, not a forecast of the exchange rate or inflation after any future policy change.
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Repair common Windows errors and clear accumulated junk for a smoother, more stable PC - no reinstall needed.Free scan · no reinstallAn IMF staff report from 2014 describes another part of the mechanism: intensifying international sanctions in 2012 created difficulties accessing international payment systems and making payments in convertible currencies. This affected the liquidity and currency composition of foreign assets. In practical terms, possessing foreign assets and being able to mobilize them to make payments are different things.
Quick Recap
How to interpret claims about exports, revenue, and the rial
- Check what is being measured. Shipments, gross sales estimates, and accessible funds are not interchangeable.
- Check the date and market for an exchange-rate claim. A historical unofficial-market figure is not a current official rate, and Iran has multiple exchange rates.
- Separate legal rules from enforcement actions. The authority, transaction, exceptions, and date matter; a designation figure is not a measure of all trade.
- Use careful causal language. Sanctions can restrict usable foreign currency and contribute to depreciation and inflation, but a claim about a particular current rial move needs event-specific evidence that distinguishes sanctions from other drivers.
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