No other country has aided Russia’s invasion of Ukraine more than Iran. Rhetorically, Supreme Leader Ali Khamenei has personally endorsed Moscow’s invasion and echoed Russia’s talking point that NATO is to blame for the conflict. Militarily, Tehran is arming Moscow with advanced attack and surveillance drones that have terrorized Ukrainian civilians and has deployed Islamic Revolutionary Guard Corps trainers in Crimea. According to Western officials, Tehran plans to provide Moscow short-range ballistic missiles that could strengthen Russia’s position on the battlefield.
Western governments have struggled with how to respond. On Nov. 4, the G7 foreign ministers condemned Iran’s military support, adding to Western efforts to rhetorically isolate Tehran. While the United States, European Union, and United Kingdom have imposed sanctions, the measures to date have been mostly symbolic, limited to asset freezes and travel bans against Iranian generals and military entities involved in developing, selling and shipping Iranian drones.
Western leaders should adopt a broader approach. Instead of focusing on the drones or missiles themselves, they should use Tehran’s decision to align with Moscow as a tool to more aggressively enforce wider U.S. sanctions on Iran, especially in the energy sector, with the goal of depressing the revenue that Iran earns from these sales.
Despite U.S. sanctions, Tehran exports around 1 million barrels per day (bpd) of crude oil and condensate (a light liquid hydrocarbon), most of which goes to China. But the Biden administration has not prioritized cracking down on this sanctions avoidance. As the U.S. sought to coax Iran to return to the nuclear accord last year, Washington stood back while China imported more and more Iranian crude. This gave Iran a financial cushion that may have contributed to its lack of urgency in reviving the nuclear deal.
In the past few months, the Biden administration has ramped up pressure on Iranian energy exports by designating some individuals and companies involved in the illicit transactions — including as recently as Nov. 3. This is a good start. But Iran’s brazen support for Russia in the Ukraine war poses a clear opportunity for the U.S. to do more.
Washington should argue that a “business-as-usual” attitude toward Iranian energy purchases cannot continue. Iran’s energy sales no longer only support a government that is rapidly advancing its nuclear program, supporting militias and terrorist groups, and violently suppressing peaceful protests; they support a government that is providing the means to wage war on European soil. And the connection between oil and arms is not just theoretical. According to the latest Iranian budget, billions of dollars from energy exports are specifically earmarked for Iran’s security and defense institutions.
The U.S. should make the public argument that every barrel of Iranian energy products smuggled and sold helps to fuel Russia’s war in Ukraine. Working in concert with the G7, the U.S. should call on countries buying or facilitating the purchase of Iranian energy products to halt, and it should diplomatically pressure those that do not comply.
It will be difficult to persuade China to stop buying Iranian crude, given its close ties with both Iran and Russia and its rejection of U.S. secondary sanctions. But the U.S. may have more success with countries such as Singapore, which has taken a firmly pro-Western stance since the beginning of the war by condemning Russia’s invasion. Yet, according to the U.S. Treasury and State departments, companies in Singapore have transported Iranian petroleum products, facilitated sanctions evasion, and imported petrochemical products, in violation of U.S. sanctions. Vessels carrying Iranian oil have been identified conducting ship-to-ship transfers off the coast of Singapore.
The U.S. also should make it more difficult for countries to hedge between support for Russia and the West while also aiding Iran’s illicit energy sales. The U.S. routinely sanctions United Arab Emirates-based individuals and entities for evading sanctions on crude oil and petroleum and petrochemical products. While India stopped purchasing Iranian crude oil years ago, the U.S. has accused Indian individuals and firms for facilitating sanctions evasion and selling petrochemical products, including to China. The U.S. has levied similar accusations against Malaysia, where ships carrying Iranian oil reportedly conduct transfers at sea.
Western officials may raise two objections to a more aggressive approach. First, they may worry that it would undermine efforts to revive the 2015 nuclear agreement, which is currently in limbo given intransigent Iranian positions. This likely would not be the case. Instead, cracking down on a critical source of Iranian hard currency would strengthen Washington’s argument that Iran’s alternative to a negotiated agreement is unsustainable.
Second, depressing Iranian oil exports could drive increased demand for Russian oil, given their similarity in grades. This could undermine Western efforts to cut off a key source of Russian revenue. But this concern likely can be mitigated.
The West is already seeking to implement a plan to cap what Russia can earn from any barrel of oil it exports. Further, it is unlikely that an Iran campaign would fully cut off Tehran’s oil exports; the goal would be to complicate them. If the U.S. breaks some of the intricate, clandestine chains that connect buyers and sellers, this would create additional costs for Iran, forcing it to sell at a steeper discount or pay more to smugglers. In effect, the West would be imposing a de facto price cap on Iranian crude, cutting deeper into the revenue it can earn. As a backstop, Saudi Arabia likely maintains sufficient spare capacity to balance the market should Iranian exports fall dramatically.
Iran’s backing of Russia has provided the United States a new way to intensify pressure on Tehran, furthering Washington’s goal of punishing Iran for exporting weapons, cracking down on protesters, and sidestepping nuclear negotiations. It should not let the opportunity go to waste.
Henry Rome is a senior fellow at the Washington Institute for Near East Policy, specializing in Iran sanctions, economic, and nuclear issues. He previously was the deputy head of research and a director covering global macro politics at Eurasia Group. Follow him on Twitter @hrome2.