The Persian Gulf is the First Test for ‘Operation Economic Fury’

With a ceasefire in place and a military blockade in the Strait of Hormuz, the Trump administration is now pivoting to economic warfare against the Islamic Republic of Iran.

On April 14, the Treasury Department shared with the UAE and Oman a list of banks in their “jurisdictions that have allowed Iranian illicit activity.” This shot across the bow — which was also directed at China and Hong Kong — is a warning that offering Iran a financial lifeline will come with a cost.

The United Arab Emirates (UAE) and Oman have long been jurisdictions exploited by Iran’s transnational network of sanctions busters. Bank Saderat, sanctioned under U.S. counterterrorism authorities for supporting terrorism, and Bank Melli, designated under both U.S. counterterrorism and counterproliferation authorities for its role in the Islamic Republic’s nuclear and missile program, have both continued operating in Oman and the UAE. The U.S. Financial Crimes Enforcement Network (FINCEN) found dozens of Iranian front companies, including oil companies in the UAE and Singapore, that “transacted approximately $4 billion in 2024.”  

Iran’s Lifeline in the Gulf

Tehran has turned to UAE-based front companies and financiers to continue exporting hundreds of thousands of tons of fuel each month. Additionally, because Iranian banks are cut off from global financial networks like SWIFT, Tehran has used informal transfer systems tied to money exchange houses in the UAE as well as Oman to move funds and swap Iranian rials into U.S. dollars and access hard currency.

Indeed, these same mechanisms are also evident in Oman, where entities based in the sultanate, such as “Iran-Green Mile,” have advertised transfers through Bank Muscat accounts, enabling funds to be deposited abroad and paid out in Iran. It appears that the money is settled between intermediaries, making transactions difficult to trace and regulate.

Iran has used this method to transfer money to its proxy in Lebanon, Hezbollah. The Wall Street Journal reported in November 2025 that Iranian funds are “deposited with a dealer in Dubai and paid out by a dealer in Lebanon, with the two dealers netting out or otherwise settling accounts later.”

Emirati and Omani Openness to Iran’s Illicit Financial Activity

The UAE and Oman’s tolerance of Iran’s financial networks is rooted in a combination of economic and strategic motives.

In the UAE, this tolerance stems from an economic model that supports an open, low-friction financial hub to bring in global capital. However, that model has also drawn financial flows from sanctioned and high-risk jurisdictions, including Russia and Iran.

As a result, billions in Iranian-linked assets are now embedded in the Emirati economy, with numerous instances of the UAE failing to act against these networks until it is too late. The authorities have been reluctant to fully crack down on these networks because freezing them threatens to undermine investor confidence and damage the UAE’s business-friendly reputation. Still, the UAE has periodically done so.

Oman, meanwhile, has maintained a hedging strategy toward Tehran. Unlike other Gulf states, Oman has consistently kept open political and economic relations with Iran and acted as a key intermediary between Tehran and Washington, helping pave the way for everything from nuclear to hostage deals. This posture has translated into a willingness to preserve channels of economic interaction with Iran.  

Washington Must Boost Pressure on Gulf Nations

Washington should continue targeting specific exchange houses and front companies in the UAE and Oman. It should also press both governments to shut down sanctioned entities tied to terrorism and proliferation, including Bank Saderat and Bank Melli.

At the same time, the United States must demand increased oversight of banks processing Iran-linked transactions, such as Bank Muscat. If no progress is achieved, Washington should be prepared to impose sanctions on these facilitators to sever the Islamic Republic’s access to the international financial system. The United States can leverage its relationship with the Gulf states, pointing to its role in helping defend their territories against Iranian military threats, to press for greater financial oversight. Such an approach should align directly with the interest of these states in preventing illicit financial flows.

Ahmad Sharawi is a senior research analyst at the Foundation for Defense of Democracies (FDD), focusing on Iranian intervention in Arab affairs and the Levant. Behnam Ben Taleblu is the Iran Program senior director and a senior fellow. For more analysis from the authors, please subscribe HERE. Follow FDD on X @FDD. Follow Ahmad on X @AhmadA_Sharawi and Benham @therealBehnamBT. FDD is a Washington, DC-based, nonpartisan research institute focusing on foreign policy and national security.