Iran remains one of the most heavily sanctioned countries in the world. However, its economy—especially the energy sector—is booming. Recent data shows that Iran’s oil and gas industry is reaching historic highs, defying years of global restrictions.
Sanctions Still in Place but Losing Impact
This week, the United States imposed fresh sanctions targeting a smuggling network accused of disguising Iranian oil as Iraqi oil. The US also penalized a financial institution linked to Hezbollah, the Treasury Department confirmed.
Still, many experts argue these sanctions are now largely symbolic. As author Agathe Demarais told NPR, “The reality is that sanctions are sometimes effective, but most often not, and it is hard to accurately predict when they will work.”
Even though Iran was once the most sanctioned country—until Russia took that title in 2022—its energy success tells a different story.
Oil Production Hits Record Levels
Iran’s oil production is thriving despite international pressure. In 2024, oil output reached a 46-year high, and it’s expected to grow even more in 2025.
The country also earned $78 billion in energy exports in 2024. That’s a huge jump from $18 billion in 2020. This growth shows how Iran has skillfully adapted over the years.
How Iran Outsmarted Sanctions
Iran’s ability to bypass sanctions stems from a mix of factors. These include shifting US political strategies, Iran’s creative trade tactics, and China’s increasing role in global trade.
At times, the US chose not to enforce sanctions strictly. This decision helped keep global oil prices stable and inflation under control. Meanwhile, Iran and China built a reliable system that bypasses international rules.
Expanding Beyond Oil
Iran didn’t just depend on crude oil. It diversified its energy exports, producing more condensates and natural gas liquids like ethane, butane, and propane. These products now bring in large amounts of foreign currency.
Iran owns the second-largest natural gas reserves in the world and ranks third in production after Russia and the US. Its biggest gas field, South Pars, located in Bushehr province, contributes 66% of the country’s total gas output. Iran shares this gas field with Qatar, where it’s called the North Field.
Domestic Strength with Military Support
Iran’s Islamic Revolutionary Guard Corps (IRGC) played a crucial role in building domestic infrastructure. This move helped Iran process and export energy products independently, without needing help from foreign companies.
China: The Key Customer
China has emerged as Iran’s most important oil buyer. It now purchases about 90% of Iran’s oil exports. The two countries have built a sanctions-proof trade system, using non-dollar payments and discreet shipping routes.
Even though Chinese customs stopped officially reporting Iranian oil imports in 2022, shipping data tells a different story. According to Kpler, China’s Iranian oil imports nearly doubled in 2024 to 17.8 million barrels per day, compared to 2022.
Geopolitical Tensions Don’t Slow Output
Despite tensions between Iran and Israel, Iran’s oil production hasn’t suffered. When facilities are damaged, they are repaired quickly. The US has also stepped in to prevent broader disruptions in the global energy market.
Conclusion: Sanctions Losing Their Grip
Iran’s oil sector has become stronger than ever. The country continues to earn billions from exports, thanks to support from China, military-led development, and clever strategies. As a result, Western sanctions now appear ineffective, allowing Iran to secure a steady flow of petrodollars.