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Sanctions have made Iranian oil harder and riskier to buy, ship, insure, finance, and pay for—but they have not stopped exports. Reported shipments remained high into early 2025, with almost all reportedly going to China. The key distinction is that oil shipped and revenue recorded are not the same as foreign currency Iran can freely access or spend. Limits on that usable currency can add pressure to the rial and inflation, alongside domestic policy, oil prices, expectations, and other disruptions.
How do sanctions affect Iran’s oil exports?
U.S. sanctions raise the legal and commercial risks for foreign companies and financial institutions involved in specified significant transactions connected to Iranian petroleum, sanctioned Iranian banks, or the rial. Depending on the authority and transaction, exposure can extend beyond the buyer to intermediaries, shipping companies, vessel owners, insurers, and financial institutions. This is not a blanket statement that every transaction by every foreign person is prohibited: the actor, transaction, applicable rule, date, and any exception matter.
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The Congressional Research Service (CRS) explains that U.S. secondary sanctions are intended to deter foreign actors from participating in activities that would be prohibited for U.S. persons. Some statutory exceptions operate under defined conditions; CRS says the last approved significant-reduction exception was in 2018. Sanctions designations and authorizations can change, so a specific transaction requires checking current U.S. Treasury Office of Foreign Assets Control (OFAC) rules and designations.
Exports continue, but are difficult to measure
CRS reported that Iranian petroleum exports reportedly reached a record in the first quarter of 2024, with almost all reportedly destined for China, and remained high into early 2025 despite reported disruptions. These are reported estimates, not a complete count: concealed origins and shipping routes make the trade harder to track.
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CRS describes Iranian petroleum as reportedly sold below prevailing prices to attract traders, particularly smaller, semi-independent Chinese refineries often called “teapots.” Reported concealment methods include obscuring a cargo’s origin, spoofing tanker-location signals, and using older shadow-fleet vessels with difficult-to-trace ownership. Such practices can help sustain sales while increasing the risks of detection and enforcement for participants.
Enforcement targets the shipping chain
OFAC’s April 16, 2025 maritime advisory describes shipping-related evasion indicators and recommends risk-based due diligence. In its April 2025 review, OFAC said actions taken in December 2024 and February–April 2025 had 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 enforcement figures for the specified actions, not a count of all Iranian tankers or exports.
Why do oil sales not equal money Iran can freely use?
Sanctions can constrain both the route used to pay for a cargo and what the seller may do with the proceeds. Under certain exceptions described by OFAC, proceeds must 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 with that country rather than third-country purchases. In such a case, a sale can produce a reported dollar value without providing freely transferable dollars for general use.
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Outbyte PC Repair FREERepair Windows errors before they cause bigger problemsFix Now →Outbyte Driver Updater FREEFix the driver behind crashes, sound loss and screen glitchesFind Drivers →Other rules address transactions involving designated Iranian banks, including the Central Bank of Iran (CBI), and specified dealings by foreign financial institutions. OFAC also warns that certain significant rial transactions, rial derivatives, or holdings of rial-denominated accounts outside Iran can create correspondent-account or blocking-sanctions exposure. Some barter arrangements involving Iranian petroleum may also be sanctionable, particularly when a financial institution is involved or the arrangement supports the National Iranian Oil Company (NIOC), Naftiran Intertrade Company (NICO), or the CBI. A transaction does not fall outside sanctions merely because it is described as non-cash.
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In a May 2026 enforcement release, the U.S. Treasury described exchange houses and foreign front companies as mechanisms used by sanctioned Iranian banks and associated companies to receive funds from overseas oil and petrochemical sales. That is Treasury’s account of networks it targeted; it does not quantify how much oil revenue reaches Iran or how much is available for general spending.
Keep the three measures separate
| Measure | What it tells you | What it does not establish |
|---|---|---|
| Barrels shipped | Estimated physical exports over a stated period. | The price received, payment route, or amount Iran can access. |
| Gross sales revenue | An estimate of the sales value of petroleum for a stated year. | That the proceeds were repatriated, freely transferable, or net government income. |
| Accessible funds | Money Iran can actually mobilize and use for a particular purpose. | A comprehensive current total cannot be inferred from reported exports or gross revenue alone. |
CRS cites U.S. Energy Information Administration estimates of Iranian petroleum sales revenue of $54 billion in 2022 and $53 billion in 2023. These are gross revenue estimates for those years, not estimates of unrestricted foreign exchange or net government income. The reviewed sources do not establish a reliable current percentage of oil proceeds that Iran can readily spend in reserve currencies.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How can payment restrictions affect the rial and prices?
Oil exports are an important source of foreign exchange. If sanctions reduce sales, force discounts, restrict where proceeds can be held or spent, or impede transfers and international payment services, the foreign currency usable for imports and market intervention may be less than gross export receipts suggest. Less accessible foreign exchange can constrain import payments and the authorities’ ability to supply currency to the market, adding depreciation pressure—especially in parallel markets—and potentially widening the gap between exchange rates.
A weaker rial can make imported goods and production inputs more expensive, contributing to inflation. The effect depends on the wider policy and market context: sanctions are one factor alongside fiscal and monetary decisions, oil prices, expectations, political uncertainty, and other disruptions. Inflation and fiscal pressures can also influence the currency, so the relationship runs in both directions.
What historical evidence shows—and does not show
CRS reported that the rial’s unofficial-market value fell by about 56% between January 2012 and January 2014 amid sanctions. The same CRS account says the currency stabilized after the 2013 interim agreement, then fell sharply amid the prospect and reimposition of U.S. sanctions in 2018. These are historical periods and an unofficial-market measure; they are not a current exchange rate or a universal estimate of sanctions’ effect.
A 2022 IMF Working Paper by H. Elif Ture and Ali Reza Khazaei analyzed Iranian quarterly data from 2004 through 2021. Its model identifies 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’s sanctions-removal scenario is a model-based analysis, not a forecast of a particular rial rate or inflation outcome today.
An IMF staff report from 2014 documents another part of the mechanism: intensifying international sanctions in 2012 made it harder to access international payment systems and make payments in convertible currencies, affecting the liquidity and currency composition of foreign assets. Holding a foreign asset is therefore not necessarily the same as being able to mobilize it for payments.
What can be concluded about sanctions and the rial today?
Sanctions can weaken the foreign-exchange benefit Iran receives from oil by raising transaction costs and risks, limiting payment routes, and restricting access to proceeds. That mechanism can contribute to currency depreciation and inflation, but the figures above do not isolate sanctions’ contribution to any particular current exchange-rate move. Iran also has multiple exchange rates, so a rate without its market type and date is ambiguous. The available evidence does not provide a single current causal estimate or a complete accounting of accessible oil proceeds.
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