US President Donald Trump has declared economic war on Iran, vowing to isolate the regime in a move he hopes will bring about what military force has so far failed to accomplish: surrender.
The United States has already targeted Iranian oil sales and imposed a blockade, significantly reducing the amount of Iranian crude available for export to international buyers, including China. But sanctioning Chinese buyers and banks seems an unlikely move ahead of President Xi Jinping’s state visit to the United States in September.
Kupler, which tracks shipping movements, estimates that the Iranian government may already have enough oil to cover about four months’ worth of export revenues outside of the blockade, but said oil revenues could drop beyond that to zero if Iran’s exports are throttled.
Iran’s economy has already been hit hard by the war and is suffering from rampant inflation, but it could be months before the economy is completely destroyed. Jorge Leon, head of geopolitical analysis at consultancy Rystad, said that following decades of U.S. sanctions, Iran has developed a “survival economy that can withstand further economic pain for an extended period of time.”
To really tighten the screws, President Trump will need to address the secret trade and banking networks that allow Iran to evade sanctions and procure weapons. According to the U.S. Treasury Department, this will require a crackdown on networks that operate most prominently through the United Arab Emirates, Hong Kong, and Singapore.
In a significant blow to the Iranian regime, the UAE announced this week that it had suspended all trade and financial transactions with Iran. Still, according to President Trump, restricting all illegal activities, including “oil smuggling, lime exchange, cash transfers, money exchanges, ship registries (and) front companies,” will require significant coordination across multiple countries and will not happen overnight.
CNN’s Stephen Collinson contributed to this report.
