Iran economic squeeze plans are moving closer, with Treasury Secretary Scott Bessent saying Washington could unveil new measures as soon as next week.
However, the source said the administration has not set out specific steps. It added that Iran already faces a naval blockade and thousands of sanctions, which narrows the list of tools still available. Analysts also said many options could bring limited leverage or raise the risk of a clash with Beijing.
Any action tied to Chinese buyers matters for oil markets. The source said China buys most of Iran’s crude, and much of that oil goes to independent teapot refiners. Because many of those refiners have little exposure to the US financial system, Washington may find them harder to pressure than larger buyers.
Iran Economic Squeeze Targets China Links
Treasury has already sanctioned some smaller Chinese refiners and firms, according to the source. It also said Bloomberg Economics reported that Treasury warned two larger Chinese banks about possible secondary sanctions if Iranian funds pass through their systems. Still, the administration has not named those banks, and the source said officials want to avoid provoking Beijing before a planned meeting between President Trump and President Xi Jinping.
Meanwhile, the source said Washington is also looking at exchange houses, mostly in the United Arab Emirates. These firms help Iran turn oil income, often paid in yuan, into usable currency. In addition, officials are discussing broader secondary sanctions on any entity that does business with Iran, using the North Korea campaign as a model.
Oil Market Risks and Legal Hurdles
The source said Washington could also shift from freezing Iranian state assets in US jurisdiction to confiscating them. Yet other ideas face bigger barriers. A land blockade would need help from Iraq, Turkey and Pakistan, and the source said Iran’s mountainous borders would make that hard to carry out.
Secondary tariffs on countries that trade with Iran also face a legal problem. According to the source, a Supreme Court ruling removed the legal basis for that step. As a result, analysts said moves against teapot refiners and exchange houses appear easier to use in the near term than action against major Chinese banks, a land blockade or new tariff powers.
Still, the source said curbs on discounted Iranian barrels could tighten supply and lift oil prices, especially with an elevated geopolitical risk premium already in the market.
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Source: InvestingLive
