In oppressive regimes, fewer resources need to be put into building infrastructure and improving the human condition of its citizens when more and more of the country's income is generated by harvesting natural resources or via other tasks that mostly require unskilled labor. Democracies only really build infrastructure because their citizens need it to focus on generating economic growth via their own skilled labor, which often can't be done without roads, stable electricity, clean drinking/industrial water, etc.

In these situations, for republics like the United States, the best way to encourage the country to improve the standard of living for the citizens is via sanctions since it forces the country to sell these commodities at lower prices to a smaller group of potential buyers. If enough countries limit trade to where the country has to primarily rely on its own citizens for economic stability, they'd be further pressured into at least partially building schools and infrastructure and other things we/the United States believes should be a bare minimum for life.

In the case of Iran all the sanctions have done, was further embolster the hardliners in government. And since there is no carrot left to give the hardliners also get to say that any act of moderation clearly didn't work. I'd say society is at a breaking point but at what cost? It's unlikely that the country will ever go back to trading with the west, China and Russia now hold a firm grip on everything.

I wouldn't worry about "ever going back" to trading with the West: as they say, "money talks".

National animosity will remain and it will be a political tool that can be easily put to use, but as long as there's money to be gained to improve life for your local population, trades will start happening.

I suspect They also weaken the general military capability given economy generates the tax to pay the military. Not a perfect system of course.

I think the point is to make the populace angry enough that they assist in overthrowing the regime.