Reasons for the failure of maximum pressure on Iranian oil

According to Energy Press; In 2018, US sanctions against Iranian oil, including major Iranian exporters, banks and shipping companies, were reimposed, temporarily reducing Iranian oil exports. In this regard, the United States imposed sanctions on Iran’s oil sector and tried to block the access of companies and individuals involved in trade with Iran. The US called on Southeast Asian countries to adhere to the proper implementation of sanctions against Iran, but on the other hand, countries such as Malaysia and China have very friendly and long-standing relations with Iran.
According to Western media claims, the transfer of oil from Iran to China via Malaysia is a source of tension between the United States and regional powers such as Malaysia, as Washington has asked Kuala Lumpur to make more efforts to address this issue, but with little success.
Why the maximum pressure policy failed
However, it seems that the second Trump administration is seeking to return to maximum pressure on Iranian oil exports. The Wall Street Journal, citing sources familiar with the president-elect’s initial plans, revealed that Donald Trump intends to renew his so-called “maximum pressure” approach against Iran.
Trump’s “maximum pressure” policy is a strategy aimed at constraining Iran’s nuclear program and reducing its influence across the Middle East. The policy sought to achieve these goals through tough economic sanctions, effectively blocking Iran’s access to global financial systems, and reducing its oil export revenues. The aim of the approach was to force Iran to renegotiate the nuclear deal on US terms or even completely halt its nuclear activities.
After the US withdrew from the Iran nuclear deal in 2018, Trump reimposed sanctions and cut off Iran’s connection to international oil markets. The sanctions expanded to sectors such as metal exports, banking, and Iran’s central bank, and froze assets held abroad. This rapid economic isolation caused a sharp temporary decline in Iran’s oil exports.
Although this policy had a negative impact on the Iranian economy, it did not achieve its goals. Also, regarding global oil markets; US sanctions on Iranian oil exports led to a sharp reduction in supply, forcing the US to coordinate with allies such as Saudi Arabia to increase production. Despite these efforts, oil prices have risen intermittently, especially during Persian Gulf tensions that affected tanker traffic in the Strait of Hormuz.
While traditional buyers such as Japan and South Korea backed away cautiously from US sanctions, China stepped in, taking advantage of Iran’s discounted oil, and small independent Chinese refineries began to supply Iranian crude. This solution allowed China to benefit from Iranian oil, although it remains a source of tension with Washington.
Analysts believe that a major reduction in Iranian oil exports could lead to a rise in oil prices, all else being equal, if the US increases sanctions. Other analysts also note that Trump’s other potential policies, particularly the import tariffs he has pledged, could dampen global and U.S. economic growth and, consequently, oil demand.
It should be noted that a tougher stance on Tehran would require cooperation from major oil buyer Beijing, which could escalate into Trump’s promised trade war with China. This is because reduced Iranian oil exports would also hurt China, the country’s main customer, buying more than 90 percent of Tehran’s oil shipments.
If sanctions are tightened, China could see higher oil costs, which would impact its refining industry, especially “small” independent refiners that are already struggling with weak fuel demand and shrinking profit margins. Therefore, sanctions on tankers, companies, ship-to-ship transfers (STS) and their circumvention methods are unlikely to have a lasting impact on Iran’s oil trade.