The Trump administration launched "Operation Economic Outcast" to squeeze Iran financially and try to force the regime into concessions to end the conflict in the Middle East.

Washington is warning world leaders to stop doing business with Iran and threatening to cut companies from the U.S. financial system should they do so. The U.S. is simultaneously blockading Iranian ports, choking off the regime's primary financial lifeline.

Iran, however, has spent years setting up a complex system of oil sales and clandestine shadow banking that it hopes will sustain its economy and military long enough to outlast the economic assault.

Here are the ways Tehran seeks to blunt U.S. power:

Iran has oil outside the U.S. blockade-and an eager buyer

The U.S. naval blockade of Iran's ports has reduced Iranian oil exports-its main revenue source-to near zero. But Tehran still has millions of barrels of oil stored offshore in oil tankers, mainly in the waters off Malaysia. China buys more than 80% of Iranian oil exports, and although the blockade has limited deliveries, Beijing imported more than 500,000 barrels a day so far in August, according to data firm Kpler.

These deliveries rely on an elaborate ship-to-ship transfer system, where sanctioned tankers unload crude onto vessels in international waters off the coast of Malaysia to mask the fuel's origin. Those tankers then ship the cargo to China, where it is logged as a non-Iranian import. Ship-tracking company Vortexa estimates that Iran has roughly 80 million barrels of crude in floating storage in Asian waters, representing billions of dollars of potential revenues for Iran.

China's currency offers financial plumbing

U.S. sanctions generally aim to cut off targets from the U.S. financial system, turning them into economic pariahs and threatening companies that dare to trade with them. But sanctions become less effective if U.S. enemies seek to avoid the U.S. financial system and the U.S. dollar entirely.

Iran sells most of its oil to China, including $6 billion worth of crude during a brief truce with the U.S. over the summer, and those transactions are increasingly settled in Chinese yuan. Iran then buys goods and services from China or it barters the oil in return for Chinese companies to build infrastructure inside Iran. These transactions are outside the oversight of U.S. officials and blunt the impact of U.S. sanctions.

Iran uses cryptocurrencies to avoid U.S. oversight

Iran's crypto ecosystem has grown rapidly in recent years as sanctions have limited the regime's access to regular currencies like the U.S. dollar. The Iranian regime has used billions of dollars in cryptocurrencies to conduct trades and acquire weapons and commodities, researchers say. Iran's Islamic Revolutionary Guard Corps also has used crypto exchanges to get paid for oil sales, particularly from China.

In response, Washington has placed sanctions on Iranian crypto exchanges and seized more than $1 billion in digital currency from Iran. That has made it harder and costlier for Iran to move money through these channels. But policing the market is hard because much of the industry isn't regulated and transactions can be anonymous. The Iranian crypto platforms sanctioned by Washington are only the most prominent nodes in a larger network, researchers say.

Shell companies help Iran access some dollars

Iran still needs access to the U.S. dollar and other currencies to buy products and weapons and funnel money to its Middle East proxies such as Hezbollah and the Houthis, according to Western officials. Tehran operates a network of shell companies in hubs including Hong Kong and Dubai that are controlled by Iranian exchange houses. These move Iranian oil proceeds and revenues from other exports into currencies such as dollars, euros and Emirati dirhams.

The U.S. Treasury has used sanctions to aggressively target companies and individuals involved in this system. But it remains a game of whack-a-mole. As Washington sanctions one front company, Tehran simply spins up another. Many jurisdictions also have proven reluctant to police the Iranian network.

Weaponizing the shadow network

Iran's shadow system allows it to buy materials used to create drones, ballistic missiles and other weapons, largely from companies in China that sometimes are unaware of the ultimate buyer. Even if the Chinese firms know that materials are to be delivered to Iran, these companies are often too small to care about U.S. sanctions or are already disconnected from the global financial system.

For example, Iran's Shahed attack drone, which features Chinese components, has threatened U.S. allies and eroded America's military advantage.