Dr. Hamad Kasasbeh

With President Donald Trump announcing an expansion of economic pressure on Iran and warning of consequences for countries and entities that provide Tehran with an economic lifeline, the confrontation has entered a different phase. The objective is no longer simply to reduce Iran’s ability to sell oil, but to make dealing with it more difficult and costly for buyers, shippers, banks, and intermediaries. This raises the more important question: when Iran loses part of the value of its trade, who ultimately pays the price, and who captures the gains along the way?

Iran enters this phase under clear economic pressure. Yet sanctions do not need to halt exports entirely to have an effect. If Tehran sells its oil at a deeper discount and bears higher costs for transport, insurance, financing, and intermediation, part of the value of each barrel is lost before the proceeds reach the domestic economy. The more meaningful measure of pressure, therefore, is not simply the number of barrels leaving Iran, but the net value Iran is able to retain from each barrel.

The longer-term risk, however, may lie less in current revenues than in deferred investment. A country can live with lower income for some time, but postponing investment in oil fields, electricity, industry, technology, and human capital leaves an impact that accumulates quietly. This is the paradox of a “resilience economy”: it may protect the present, but at the expense of the future. Sanctions may therefore fail to bring down the Iranian economy while still making it less productive, slower at creating jobs, and more difficult to return to sustained growth.

This is also where China’s role looks different. China is not merely an outlet that keeps Iran afloat; it is a buyer whose leverage grows as the seller’s alternatives shrink. The more Tehran depends on the Chinese market, the greater Beijing’s ability to negotiate on price and payment terms. China may therefore find itself in a comfortable position: it has little interest in Iran’s collapse, but it does not require a full Iranian recovery either. It is enough for Tehran to remain able to sell, under conditions that give the Chinese buyer greater bargaining power.

Behind China, a less visible economic network is taking shape. Russia and some of Iran’s neighbors help keep channels for transport, payments, and re-export open, but this also creates an entire economy of intermediation: shipping companies, storage facilities, brokers, financial channels, and alternative routes. Trade does not disappear so much as become longer and more complicated, while part of the profit shifts from the Iranian producer to those able to facilitate its passage. In this sense, sanctions do not merely reduce value; they redistribute it.

The effects of the confrontation, however, do not stop at Iran’s borders. The U.S. economy itself can be affected when energy flows through the Strait of Hormuz and other critical maritime passages are disrupted, because higher oil prices and rising shipping and insurance costs quickly feed into fuel, transport, and production costs in the United States. From there, inflationary pressure can return and make the Federal Reserve’s task more difficult. If the Fed is forced to keep interest rates higher for longer, the cost of the confrontation moves from energy markets into credit and investment. Borrowing then becomes more expensive in the United States, while pressure increases on economies that depend on dollar financing, including many U.S. allies and emerging markets. The paradox is striking: Washington may succeed in making financing more expensive for Iran, while simultaneously raising financing costs across a much wider part of the global economy.

There is another, slower effect that may prove more important over time. Repeated use of secondary sanctions increases the economic incentive for China, Russia, and Iran to develop payment and settlement channels that rely less on the U.S. financial system. This does not imply the end of the dollar or a rapid decline of the petrodollar. It does suggest, however, that the very tools giving Washington considerable leverage today may gradually encourage others to invest in alternatives that reduce their exposure to those tools tomorrow.

Iran therefore appears to be the biggest loser in the near term, but it is not the only party paying a price. Tehran loses part of its income and investment capacity; China gains bargaining power; intermediaries capture a larger share of trade; and the United States and its allies face the risk of higher energy costs, inflation, and interest rates. Iran may be the biggest loser today, but the final balance will not be determined only by what Tehran loses. It will also depend on what China gains, what shifts to intermediaries, and how much of the cost of the confrontation returns to the U.S. and global economies. In economic conflicts, value does not always disappear; often, it simply moves from one party to another.