In a letter to President Joe Biden, a bipartisan coalition composed of 113 members of the House of Representatives asked him to hold Tehran accountable for its support for Hamas and “end Iran’s oil trade to China.” That may sound like a tall order—but it can be achieved if Biden is determined enough.

Since Biden’s inauguration in January 2021, Tehran has exported oil worth approximately $84 billion to $95 billion, with China as its largest customer. This revenue has funded Iran’s aggression abroad and oppression at home. In August 2023, Iran exported 1.7 million barrels of crude oil per day (MBPD), a level not reached since March 2019. Tehran’s average daily export in 2023 reached 1.4 MBPD by the end of September. That level represents a 61 percent increase from 2020 and a 22 percent increase from 2022.

Those increased daily export flows are reflected in the numbers for annual export flows. For example, as the World Bank notes, Iran’s overall exports declined in 2019 and 2020 by 17.3 and 12.8 percent, respectively, but then increased by 5.2 and 8.2 percent, respectively, in 2021 and 2022. With the higher export flows, Iran’s revenue flows have grown as well.

In fact, Tehran’s funds from increased oil exports over the last two years, combined with its significant increase in non-oil exports, have filled the regime’s coffers. The Central Bank of Iran’s net foreign assets—that is, its foreign assets minus its foreign liabilities—have increased by a whopping 46 percent, from $111 billion in March 2021 to $162 billion in March 2023.

Tehran’s access to its export revenue and reserves has also increased. Iranian officials have publicly boasted about their success in repatriating these funds. For example, over the last few weeks, Tehran has managed to tap into a $16 billion blocked reserve—sending $10 billion from Iraq to Oman and sending $6 billion from South Korea to Qatar. While the U.S. Treasury Department says it has reached a “quiet understanding” to refreeze the $6 billion now held in a Qatari bank, Qatar's prime minister and the governor of Qatar’s central bank have rejected that “quiet understanding,” according to Iran International. The governor of Qatar’s central bank went so far as to mock the notion of a possible refreeze, calling it “a joke and media game.” 

The combination of increased export revenue and improved access to it has enabled Tehran to intensify its nuclear and missile programs, domestic oppression, and overseas aggression. According to Reuters, Israeli security officials estimate that Tehran's funding for Hamas has risen from $100 million to $350 million over the past year. As Tehran's financial resources have expanded, its ability to support acts of terror and warfare has grown significantly.In response, it only makes sense to block Iran’s financial pipeline, especially the regime’s oil exports. 

To reduce Iran’s access to hard currency, Washington should embark on a three-stage plan:

First, Washington should focus on disrupting Iran's access to its revenue and reserves. The Biden administration can begin by reversing its decision to allow Tehran access to the above $16 billion. Following this reversal, the administration should prevent any further release of blocked funds in friendly jurisdictions, such as Japan, India, and Luxembourg.

Subsequently, Washington ought to prepare a designation package targeting banks that facilitate Tehran's access to its revenue and reserves. This information must be communicated to government officials and the financial sector in Tehran’s key trade partners—Turkey, Iraq, the United Arab Emirates, and China—giving them the choice between aligning with the United States or with Iran. The designation package should include the threat of secondary sanctions; it must absolutely block access to U.S. financial markets and networks and the U.S. dollar.

Second, Washington should curtail Tehran's oil exports through a five-pillar plan that targets the end-users of Iran's oil in China, financial intermediaries that facilitate these transactions, the tanker operators and their holding companies that transfer the oil, insurers that insure these cargos, and, finally, the front companies and individuals engaged in exporting Iran's oil. Up to this point, the Biden administration has primarily concentrated on the fifth pillar, which involves front companies. However, without addressing the other four elements of Tehran's illicit oil export network, the administration's efforts do not—and cannot—have a substantial impact.

Third, the Biden Administration should prepare for a campaign to seize the tankers involved in the transport of Iranian crude and the oil they carry. The activities and movements of these tankers are well-documented and known to both the U.S. government and industry observers. By confiscating these vessels and selling the oil on the market, the U.S. government can achieve multiple objectives. It gains greater control over the oil market by increasing the supply Washington controls, deprives the Tehran regime of revenue, and dismantles a crucial component of the oil smuggling network, which could be supporting other malign actors, such as Russia and Venezuela. Additionally, this action could compel China to purchase more oil from U.S. partners in the region, such as Saudi Arabia and the United Arab Emirates, which would likely indirectly increase U.S. leverage over China. The revenue generated could then be allocated to fund projects that support the Iranian people in their struggle against the regime, such as ensuring free access to the internet or establishing a labor strike fund.

In response, Tehran will most likely retaliate. The nature of this retaliation could involve targeting U.S. forces in the region or striking oil and gas fields and shipments from Saudi Arabia and the UAE. For the United States, the imperative is a decisive response, ensuring Tehran faces substantial consequences as a means of deterrence. This has worked before. At the end of the Iran-Iraq war, the United States successfully forced Tehran to stop its tanker war by targeting the regime’s military and economic assets in the Persian Gulf.

Tehran has a lot to lose and knows it. By targeting oil fields in Saudi Arabia and the UAE, it would be indirectly challenging China, given Beijing’s reliance on the Persian Gulf for nearly half its oil supply. Beijing will most likely pressure Tehran to consider China’s strategic concerns. Targeting Saudi Arabia and the UAE will also jeopardize the rapprochement between Tehran and Riyadh. Engaging in a full-scale conflict with the United States in Syria and Iraq through its proxy forces threatens the fragile stability in those countries where anti-Tehran forces are waiting for an opportunity to change the status quo. Armed with superior firepower, the United States is well-positioned to counter pro-Tehran forces effectively on both fronts and impose a heavy cost on them.

For years, Khamenei has created chaos in country after country to forge a new order that benefits him. Considering Russia's challenges in Ukraine and Israel's preparedness to address threats from Hamas (and possibly Hezbollah in the future), the gathering storm presents an opportunity for the United States to recalibrate the power dynamics in the Middle East, which have been tilting away from U.S. interests.

The Biden Administration must understand that funds flowing to Tehran ultimately become bullets, missiles, IEDs, and bombs used against the United States and its allies.

The time has come to cut off this source of terror.

Dr. Saeed Ghasseminejad is a senior Iran and financial economics advisor at the Foundation for Defense of Democracies. He tweets at @SGhasseminejad.

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