President Donald Trump’s sustained campaign of economic and diplomatic pressure on Iran is exerting significant strain on the Iranian regime and its military wing, the Islamic Revolutionary Guard Corps (IRGC), according to recent analyses. Months into this strategy, evidence suggests that Tehran’s regional influence and domestic stability are being eroded despite efforts by Iranian officials to portray the situation differently.
Central to the United States’ approach has been a multifaceted campaign targeting Iran’s financial networks and oil exports, aiming to undercut the IRGC’s capacity to fund its operations and allied militias across the Middle East. Shipping activity through the strategic Strait of Hormuz, a frequent focus of Iranian leverage in energy markets, has reportedly approached levels last seen before the current tensions began, indicating a decline in Iran’s ability to disrupt crucial global oil flows.
Economic indicators point to mounting difficulties within Iran. The national currency, the rial, plummeted to approximately 2.2 million to the U.S. dollar in September, down from roughly 958,000 a year prior. Meanwhile, inflation has surged close to 70%, food prices have more than doubled, and unemployment exceeds 9%, with youth unemployment officially estimated above 20%. Iran’s oil exports have endured a drastic decline, dropping from around 1.7 million barrels per day last year to roughly 260,000 barrels per day at present.
Underlying this deterioration is the challenge of financing the IRGC’s own forces and its network of allies throughout Iraq, Lebanon, and Yemen. The United States has focused on disrupting the financial infrastructure supporting these activities. This includes sanctions on entities linked to Iran’s oil trade, shadow banking operations, and companies involved in transporting and purchasing Iranian crude. China plays a crucial role, purchasing about 90% of Iran’s oil exports according to U.S. Treasury estimates. In response, Washington imposed sanctions in April on Hengli Petrochemical’s Dalian refinery for purchasing petroleum tied to Iran’s military.
Beyond targeting buyers, U.S. authorities have sought to dismantle financial channels used to move funds from the oil sales. In August, American regulators moved to sever UAE-based Banque Misr from U.S. banking systems after it reportedly processed nearly $1.8 billion for around 100 companies linked to Iranian networks. Sanctions have also been applied to individuals managing branches of Bank Melli in Dubai believed to support the IRGC’s money transfer activities.
China’s regional diplomatic influence has also faced challenges. Beijing initially hailed the 2023 Saudi-Iran agreement as a breakthrough for regional stability. However, Saudi Arabia continues to confront Iranian-backed threats in key maritime chokepoints, including the Strait of Hormuz and the Bab al-Mandab. China has also pressured Tehran to rein in the Houthi rebels in Yemen with limited success, while Saudi Arabia has sought increased cooperation with Washington, exemplified by diplomatic talks between Saudi Foreign Minister Faisal bin Farhan and U.S. Secretary of State Marco Rubio addressing regional security concerns.
Financially, Riyadh has distanced itself from China-backed initiatives such as the mBridge digital payments project, signaling a continued preference for alignment with the United States. The IRGC’s traditional leverage over Gulf energy supply has diminished as Saudi Arabia’s East-West pipeline capacity allows bypassing the Strait of Hormuz, and the United Arab Emirates has expanded crude production following its exit from OPEC quotas.
Collectively, these developments suggest Iran’s diminished capacity to exert influence both domestically and regionally, despite support from strategic partners like China and Russia. The Trump administration’s comprehensive pressure campaign extends beyond merely sanctioning the IRGC to disrupting the entire ecosystem that sustains and enables the group’s regional power projection. Advocates for the policy argue that such pressure should be maintained regardless of domestic political repercussions in the United States.