The Unseen Economy: How Stablecoins Fuel Sanctioned Oil Flows

On June 23, 2025, oil markets did something unexpected. After weeks of war fears and shipping disruptions in the Gulf, prices plunged – Brent crude fell over 6%, the sharpest one-day drop in five years. The cause? Iran launched rockets at a U.S. military base in Qatar. But the missiles were intercepted. No damage was reported. And crucially, Iran spared the Strait of Hormuz – the artery through which 30% of global seaborne oil flows.

Traders saw a window for de-escalation. Brent dropped to $72.19; WTI slid below $70. For a moment, the energy world exhaled, but the calm was fragile. Markets remain on edge as, beneath the surface, freight costs remain high, GPS jamming continues, and tankers nervously reroute around the Strait of Hormuz.

Meanwhile, another system hums along – quieter, less visible, but potentially just as disruptive: crypto infrastructure. In sanctioned economies and conflict zones, stablecoins are filling the cracks left by broken banking rails. As the oil market breathes in risk and exhales volatility, crypto quietly moves billions – slipping through, around, and occasionally against the rules.

Stablecoins in the Shadows: The Rise of Crypto-Fueled Oil Trade

While the world watches missiles and markets, crypto is redrawing the energy trade map. In sanctioned economies like Iran, Venezuela, and Russia, stablecoins – particularly Tether’s USDT – have become tools of survival and subversion. They offer what SWIFT and dollar clearing no longer provide: fast, censorship-resistant dollars.

Take Venezuela. After tightening U.S. sanctions in 2023, state oil firm PDVSA began demanding prepayment in USDT. By 2024, crypto wallets were prerequisites for doing business. Russia followed a similar path, smoothing yuan-to-ruble oil transactions with crypto bridges. One firm reportedly moved tens of millions per month this way. Even if crypto captures just a sliver of the $2 trillion oil trade, it’s enough to make sanctions leak.

Iran, in particular, has adopted a multifaceted crypto strategy to navigate financial restrictions. This includes legalizing Bitcoin mining to monetize its energy surplus and routing oil revenue through proxies like Hezbollah, using crypto as a covert payment method.

This strategy relies on local infrastructure. Nobitex, Iran’s largest exchange, was exposed in a 2025 cyberattack for its deep ties to this system, with on-chain data revealing transactions with wallets linked to Hamas, the IRGC, and Yemen’s Houthis. In a sign of the pressure on its own economy, Iran’s central bank simultaneously capped overnight toman-USDT trades to slow domestic capital flight.

How could war disrupt mining? Explore the ripple effects of military conflict on Iran’s energy supply and Bitcoin’s global hashrate in our education piece!

From Hormuz to the Blockchain: Real-Time Signals

Blockchain data doesn’t lie. When airstrikes or panic hit, crypto reacts. Chainalysis found that during April and September 2024 conflict spikes, outflows from Iranian exchanges surged in lockstep with Google searches for “Iran Israel.” Iranians moved funds into Bitcoin and USDT, seeking shelter as the rial reeled.

But Iran isn’t alone. Turkey tops global stablecoin usage by GDP – $38B in a year, equal to 4.3% of its economy. 

Over half of all Turkish crypto volume is in stablecoins. In the UAE, it’s 51%, with over $9.8B in stablecoin value moving through exchanges in H1 2024 alone. Dubai’s OTC desks and Southeast Asia’s Tron-based rails have become the liquidity pipes of a shadow market.

The Double-Edged Coin: Risks, Controls, and Reputational Fallout

Stablecoins are powerful, but not invincible. Tether and Circle routinely freeze wallets tied to sanctioned entities. U.S. and EU regulators are watching closely. Treasury’s OFAC has begun blacklisting wallets, and pressure is mounting for stablecoin issuers to geofence entire jurisdictions.

Even decentralized networks aren’t safe havens. Surveillance firms like Elliptic and TRM are racing ahead to track activity across what they call the “dark liquidity stack” – a web of tools used to obfuscate and move funds outside the regulated perimeter. Elements of the dark liquidity stack include:

• Mixers and tumblers that obscure fund origins.
• No-KYC exchanges allow anonymous large transfers.
• DEXs enabling wallet-to-wallet swaps without intermediaries.

They’ve traced funds from sanctioned oil trades across jurisdictions – often through complex, layered swaps that echo the smuggling tactics of the Gulf’s dark fleet tankers.

Exchanges, in turn, are tightening compliance measures. Binance has off-boarded scores of Iranian users. Interactions with sanctioned services dropped ~23% from 2022 to 2024. Yet as fast as regulation advances, users adapt. Proxy wallets. Privacy tools. Offshore paths. The game continues.

Crypto Tactics by Sanctioned States*

* Data compiled by The Coinomist editorial team based on open-source reporting, on-chain analytics, and public disclosures. Key inputs include reports from Reuters, Chainalysis, TRM Labs, Elliptic, Cryptorank.io, and Cointelegraph (2023–2025).

The Bigger Picture: Can Crypto Redraw the Oil Economy?

Is this a “crypto petrodollar” moment? Maybe. What’s clear is that even partial adoption of stablecoins in energy trade undermines the West’s traditional sanctions power. A digital dollar sent via Tron can settle an oil deal in minutes – far from OFAC's reach.

Regulators aren’t blind to this. There’s talk of compelling issuers to freeze funds, of stablecoin frameworks with built-in compliance. If crypto becomes core to sanctions evasion, expect sharper tools: blacklists, exchange pressure, and maybe even international crypto trade protocols.

But clampdowns carry risk. Over-policing crypto could drive sanctioned economies to build alternatives: BRICS stablecoins, gold-backed tokens, or CBDCs on neutral chains. And in a multipolar world, dollar-denominated coins might lose their dominance – not overnight, but one oil barrel at a time.

War zones and wallets — explore how modern conflicts are revealing crypto’s real role as refuge, risk, or rescue in our insights coverage!

Beyond the Battlefield: Crypto’s Expanding Role

Crypto has evolved from a speculative asset into a critical layer of financial infrastructure – especially in regions facing crisis or sanctions. In places where banks fail and borders close, blockchains become lifelines. The Iran–Israel conflict stress-tests crypto’s role in global finance – revealing both its reach and its breaking points.

A tanker burns in Hormuz. A wallet pings in Tehran. Somewhere in Dubai, a broker routes stablecoins through five layers of swaps. These are not separate stories. They’re pages from the same playbook – one that rewrites how value moves in wartime.

And the next chapter? It won’t be written in press releases. It’ll be hashed, confirmed, and settled on-chain.