Iran’s Exports Under Sanctions: The Myth of Maximum Pressure
Iran is widely perceived to be under intense and unyielding sanctions—particularly in the aftermath of the “Maximum Pressure” campaign launched in 2018. In reality, Iran’s oil and non-oil exports started to rebound in 2021 and exceeded levels under the nuclear agreement by 2024 (Figure ES1). These trends continued through 2025 and even held up during the first two months of 2026 despite global backlash against the Iranian government’s violent crackdown on protests.
The United States government maintained its sanctions on paper, gradually added new designations, and continued its public posture against the Iranian government. But the growing oil exports allowed the governing regime in Iran to increase its military capabilities and bolster its domestic security apparatus. Meanwhile, the regime used sanctions to mask structural economic problems—resource misallocation and rampant corruption.
In this paper, we provide an empirical overview of Iran’s exports from 2000 to 2025 and examine the evolution of U.S. sanctions designations and enforcement in the same period. We demonstrate a shift from successful sanctions enforcement between 2018 and 2020 to weakening pressure between 2021 and 2025. This rebound reflects the compounding effects of several factors. Most notably, starting in 2021, at the start of the Biden Administration, the U.S. made a deliberate policy choice to relax sanctions enforcement in order to reopen nuclear negotiations with Iran and stabilize relations with China. At the same time, China’s economic decoupling from the U.S. and the maturation of Iran’s sanctions‑evasion infrastructure made enforcement increasingly difficult. These trends were reinforced by the strategic importance of Indo‑Pacific partners—such as Malaysia, Singapore, and India—which function both as key evasion hubs and as priorities in U.S. competition with China. Russia’s invasion of Ukraine in 2022 further deepened these constraints: it raised oil prices and reoriented U.S. sanctions capacity toward Russia, making it even harder to curb Iran’s oil exports.
We also investigate the characteristics of trade under existing sanctions. These mechanisms are characterized by steep discounts, an evasion architecture with elevated costs, and an expanding barter system that strengthens the economic role of the Islamic Revolutionary Guard Corps (IRGC). Official estimates from the Iranian government point to a 13–18% loss on oil revenues compared with global market prices. Sanctions evasion is enabled by dark fleets operating under obscured ownership with disabled transponders, routine ship-to-ship transfers at sea, shell-company invoicing routed through jurisdictions with weak Know-Your-Customer (KYC) requirements, and yuan-denominated settlement via Chinese regional banks that bypass dollar clearing entirely.
The other key aspect of Iran’s oil trade is the barter system, which accounted for 32% of oil exports in the Persian calendar year 1404 (2025-26) budget and is projected to rise to 41% in the 1405 (2026-27) budget. Through this arrangement, Iranian oil is exchanged for Chinese-supplied goods, services, and technologies—including military equipment, surveillance tools, and infrastructure—delivered to Iranian government contractors that are disproportionately affiliated with the IRGC. The IRGC’s Khatam al-Anbiya Headquarters has emerged as one of the most prolific recipients of these contracts, taking advantage of the sanctions to strengthen its economic and political position, sidestepping private firms and the civilian government.
Looking forward, the prospect of demand for illicit Iranian oil is dimming as China addresses overcapacity in its independent refining sector and accelerates its energy transition. At the same time, we estimate that even full sanctions relief would yield only a one-time GDP boost of approximately 6.2% from increasing oil exports—notable but insufficient to deliver sustained development absent meaningful domestic political and economic reform. To usher in investments and create a flourishing, diversified economy, Iran needs reforms to establish competitive markets under the rule of law. These reforms require political capital to implement and will face opposition from entrenched economic actors who have largely benefited from their favorable treatment as government- and military-affiliated entities.