Will tougher US sanctions disrupt Iran's shadow economy?

The United States has unveiled a new phase of economic sanctions targeting Iran, focusing on five key areas: digital assets, technology, gold, aviation, and shipping. Treasury Secretary Scott Bessent warned that entities facilitating money laundering for Iran would be removed from the US dollar-based financial system. The US has imposed measures on around 60 individuals, entities, and vessels, but refrained from targeting major Chinese banks, acknowledging the limits of its enforcement.

Iran has long relied on informal networks, including exchange houses, gold, cryptocurrencies, front companies, and shipping, to bypass sanctions. The new strategy aims to make these methods more challenging by increasing costs for foreign intermediaries. Meanwhile, Iran faces severe economic challenges, with oil exports falling sharply and food prices rising by 128% year-on-year.

Businesses are struggling to maintain operations and employ staff, with many layoffs reported. The restrictions have also affected Iranian entrepreneurs abroad, making transactions increasingly difficult. While some analysts doubt the measures will spark a fundamental strategic shift in Iran, they may intensify inflationary expectations and deepen economic polarization.