Why Can't Trump's Sanctions Strategy Isolate Iran?

Strategic geography, regional economic ties and sanctions constraints make it difficult for Washington to achieve its goal against Tehran.

According to Ambassador Arjan, on August 24, 2026, Donald Trump's administration announced the start of an economic campaign against Iran under the title of "Operation Economic Exclusion" and stated that its goal is to cut off Iran's financial and commercial ties with the world and destroy the routes through which Tehran earns money, sells oil, and continues its economic exchanges.

When announcing this operation, US Treasury Secretary Scott Bessant said that Washington's goal is to cut off all of Iran's economic arteries so that the country will eventually be left alone. The US Treasury Department has also announced the expansion of sanctions against financial networks, intermediary companies, oil transport fleets and foreign parties cooperating with Iran.

This policy is based on the basic premise that if Iran's access to sources of income, banking networks, transportation routes, and business partners is limited enough, economic pressure can lead to political isolation and ultimately change Tehran's behavior.

But the distance between applying economic pressure and achieving such a result is much more than it can be ignored by announcing new sanctions or expanding the list of target companies. Sanctions may increase the cost of trade, reduce foreign exchange earnings, and make it difficult for companies to access technology and capital, but none of these consequences by themselves mean a complete cut off of a country's economic relations with the surrounding environment and global economy.

Geographically, economically, and regionally, Iran is in a situation where the implementation of its complete isolation policy faces serious obstacles. These obstacles do not mean that Iran is immune from economic pressure, but they show why turning pressure into comprehensive isolation requires controlling a wide network of relations, routes, intermediaries and economic interests, an important part of which are outside the territory and direct control of the United States.

Geography that limits the possibility of removing Iran from regional equations

The most important difference between Iran and a country that can be isolated by cutting off some trade routes or limiting a small number of economic partners is its geographical location. Iran is located at the intersection of several important geopolitical areas: the Persian Gulf and the Oman Sea in the south, the Caspian Sea in the north, the Caucasus and Anatolia in the northwest, Central Asia in the northeast, and the Indian subcontinent in the east. This position makes Iran a part of the geography of communication between the Middle East, Central Asia, South Asia and East-West trade routes.

Iran borders the countries of the Caucasus and the Caspian Sea from the north and northwest, Afghanistan and Pakistan from the east, Turkey and Iraq from the west, and Turkmenistan from the northeast. In the south, its wide beaches have access to the Persian Gulf and the Sea of ​​Oman.

This combination of land and sea borders creates a set of potential routes for trade, transport and regional communication. Therefore, isolating Iran does not simply mean preventing the entry and exit of goods from several ports or blocking several banking channels; Such a goal requires the simultaneous restriction of sea, land, financial and commercial communications in several geographical areas.

The importance of this becomes clearer when we consider geography not simply as a natural advantage, but as an infrastructure for the formation of mutual interests. Iran's neighboring countries are faced with a series of choices and geographic restrictions for supplying goods, access to markets, energy export, transit and communication with other regions.

In some cases, the route through Iran can be important in terms of distance or access to the destination; In other cases, competing routes cross the territory of neighboring countries. Therefore, Iran's position means that removing Iran from all regional communication networks is not a purely political decision, and it can create economic and logistical costs for other countries as well.

This fact creates a structural limitation for the sanctions policy. Washington can target a shipping company, a bank or an oil buyer, but in order for this action to lead to the complete isolation of Iran, it must also prevent the formation or continuation of a set of alternative relationships; Relationships may be established through intermediary companies, regional markets, various ports, land routes and non-dollar financial mechanisms. The wider a country's communication network and the more diverse its potential partners, the more difficult it will be to turn ad hoc sanctions into a complete cut off of communications.

Strait of Hormuz; The importance of Iran goes beyond the country's own oil exports

One of the clearest examples of Iran's geographical importance is its location near the Strait of Hormuz. This passage connects the Persian Gulf to the Oman Sea and then to the Indian Ocean. The importance of this strait is due to the fact that a large part of the energy trade of other countries also passes through it. For this reason, the strategic importance of this crossing is not limited to the bilateral trade relations between Iran and the United States and is directly related to the energy security of the world's major economies.

According to the data of the US Energy Information Administration, in the first half of 2025, an average of 20.9 million barrels of crude oil, condensate and petroleum products passed through the Strait of Hormuz per day; This volume is equivalent to about a fifth of the world's consumption of petroleum liquids and about a quarter of the world's seaborne oil trade. Also, about 89% of crude oil and condensate passing through this strait went to Asian markets in that period. China, India, Japan and South Korea were the destinations of about 74% of this oil flow.

These figures show that the geography around Iran is linked with the economic interests of big powers, especially Asian countries. Any policy that leads to a permanent disruption of this passage or a sharp increase in the risk of shipping through it can affect the cost of energy, marine insurance, transportation and commodity prices in various economies. In other words, Iran is located in the vicinity of a strategic bottleneck whose security and economic consequences go beyond national borders.

The more important analytical point is that the importance of this crossing turns the effort to exert pressure on Iran from a purely bilateral issue to an issue with regional and global consequences. A country located next to such a bottleneck is not easily removed from the energy and security equations of the region.

This interdependence creates a contradiction for the policy of "economic exclusion". America wants to limit Iran's economic relations, but the realization of this goal takes place in an environment where energy security and the continuity of maritime trade are of vital importance to many other countries.

These countries may disagree with Tehran's regional policies and, at the same time, are interested in maintaining the stability of energy routes, reducing trade costs, and preventing supply chain disruptions. Therefore, their decision about economic cooperation with Iran is not only influenced by Washington's political position, but their own economic interests and security calculations also play a role in it.

Iran at the intersection of land and sea routes

The geographical importance of Iran is not limited to the Strait of Hormuz. The location of this country between the Persian Gulf, Central Asia, the Caucasus and the Indian subcontinent makes it one of the potential routes of communication between different regions. Iran's southern ports have access to open waters, and the country's road and rail network can support part of the transportation of goods between the south and north or east and west, if the necessary infrastructure and coordination are provided.

This position is particularly important from the point of view of landlocked countries. Central Asian countries need a network of rail, road, port and customs routes to access global markets. Iran is one of the geographical options to connect these countries to the open waters and markets of South Asia. In the same way, Iran's connections with Türkiye and Iraq can facilitate part of the exchanges between the Middle East and more western regions.

From this point of view, the operation of economic exclusion is facing a complex challenge. Restricting one channel may shift business to another channel, increase costs, or introduce new intermediaries into the supply chain; But this does not necessarily mean that the business has stopped. In order for the pressure on a route to lead to a complete interruption of economic communication, the capacity of alternative routes must also be limited or the cost of using them should increase to such an extent that it is no longer bearable for the commercial parties. In order to completely cut off Iran's economic connections, America should block not only direct trade routes, but also alternative ways of transferring goods and commercial exchanges through neighboring countries. A task that is much more complicated than sanctioning a specific company or institution due to the multitude of borders, transportation routes, and potential business partners of Iran.

Why can't Iran's neighbors be left out of economic equations just by Washington's pressure?

The geographical factor shows its real importance when it is linked with the economic interests of the surrounding countries. Iran is located in the neighborhood of countries that provide part of their commercial or energy needs from relations with it, and besides, it also has relations with major economic powers such as China. Therefore, the policy of isolating Iran can only lead to a widespread cut off of economic relations when these countries are also willing to accept the cost of abandoning their relations with Iran.

Iran's foreign trade statistics show that these connections were not just dependent on a few limited exchanges or a specific trade route. According to the customs data published by Al Jazeera in August 2026, Iran had exported about 56 billion dollars worth of goods to at least 112 countries and regions in 2024. China with around 14.6 billion dollars and Iraq with around 11.7 billion dollars were among the most important export destinations of Iran; Turkey and Afghanistan were among the main partners.

China is a clearer example of the limitations of the US economic pressure policy. Despite Washington's sanctions, the purchase of Iranian oil by China has continued in recent years. Columbia University's Center for Global Energy Policy estimates show that in 2025, China will have imported about 1.38 million barrels of Iranian oil per day, which was an important part of Iran's seaborne crude oil exports. A part of this trade is carried out through routes that are not registered in the official Chinese customs statistics as imports from Iran.

Therefore, although US sanctions increase the cost of selling Iranian oil, limit the range of buyers, and force Tehran to use more complex transportation and payment networks, the continued purchase of Iranian oil from China shows that American economic pressure does not necessarily lead to the termination of relations with all of Iran's important partners. Especially when a country still has an economic incentive to provide its own energy and is willing to accept part of the cooperation costs against pressure from Washington.

In Iran's neighborhood, economic relations cannot be destroyed simply by a foreign decision. Iraq is an important example, because the economic relationship between the two countries is not limited to buying and selling goods, and gas and electricity also play a role in it.

According to a Reuters report in August 2026, the bilateral trade between Iran and Iraq had exceeded 10 billion dollars in 2025. In addition to supplying part of the consumer goods, food and construction materials of the Iraqi market, Iran has also played a role in supplying the gas needed by the country's power plants. Breaking these relations for Baghdad can also affect the energy supply and economic activity of parts of the country.

Türkiye is also an example of this balance. Both countries have a land border and have established economic relations with each other in areas such as natural gas and commodity trade. A Reuters report in August 2026 estimated the annual trade volume between Iran and Turkey at around 5-6 billion dollars and said that Iranian gas accounts for around 13% of Turkey's gas imports.

The experience of continuing Iran's oil exports to China, trade and energy ties with Iraq, and economic relations with Turkey show that secondary sanctions can put companies and governments in a difficult position between accessing the American economy and maintaining relations with Iran, but their final decision depends on their dependence on the American market, domestic needs, and the cost they will incur to cut ties with Iran.

China and the limitations of trying to cut off Iran's oil revenues

China has a special place among Iran's economic partners. The Chinese market has been one of the main destinations for Iran's oil exports in recent years. This relationship shows that the policy of economic isolation faces a problem beyond the geography of borders and the US government should be able to influence the economic decision of an actor that has its own independent energy and commercial interests and at the same time pursues a wider strategic competition with Washington.

The US-China Economic and Security Relations Review Commission announced in a report in November 2025 that China has become one of the main buyers of Iranian oil and that a network of independent refineries, intermediary companies, and transportation and payment mechanisms are involved in Iran's oil trade.

Citing its own estimates and data from other institutions, this report talks about the very high share of China in the purchase of Iran's export oil and explains that part of this trade is done through middlemen and complex origin documents. These figures must be interpreted in light of the limitations of official data and the difficulty of tracking sanctioned shipments, but overall, the evidence shows that US pressure has so far failed to completely eliminate foreign demand for Iranian oil.

A study by the Carnegie Endowment for International Peace in June 2026, focusing on the limitations of internationalization of the yuan in the context of war and tensions around Hormuz, addressed the issue of the extent to which Iranian oil-related payments use non-dollar mechanisms. This study explains that some oil transactions between Iran and China are conducted through smaller banks and payment mechanisms in yuan; Mechanisms that have less direct dependence on the dollar financial system.

Resistance economy as a structural response

But geography alone does not explain why Iran was able to use these routes effectively. The complementary factor is the set of policies that have been formed in Iran under the name of "Resistance Economy" as a systematic strategy against the pressure policies of the West. This strategy focuses on reducing dependence on oil income, expanding non-oil exports, strengthening domestic production and developing alternative payment systems.

The results of this approach can be seen in the statistics. Iran's non-oil exports reached about 58 billion dollars in the period from March 2024 to March 2025. In the first half of 1404, non-oil exports maintained their upward trend even in spite of political pressures and the activation of the sanctions mechanism known as the trigger, and the country's foreign trade was on the path of sustainable growth, relying on regional and neighboring markets.