Treasury Secretary Scott Bessent has promised unprecedented economic pressure on Iran as soon as next week, but most remaining levers run through China. Beijing buys the large majority of Iran's oil, much of it through independent "teapot" refiners with little exposure to the US financial system, limiting how hard Washington can squeeze Tehran without risking a fight with Beijing.
Treasury Secretary Scott Bessent says Washington is preparing measures against Iran unlike anything seen before, with new steps expected as soon as next week. The administration has not detailed what it has in mind. Iran is already under a naval blockade and thousands of existing sanctions, so the range of remaining pressure points is narrower than it first appears.
China's teapot refiners are hard to deter
China buys the large majority of Iran's crude, and much of it is processed by independent "teapot" refiners with little exposure to the US financial system, making them harder to deter than larger buyers. Treasury has already sanctioned some smaller Chinese refiners and firms.
According to Bloomberg Economics, Treasury has warned two larger Chinese banks that they could face secondary sanctions if Iranian funds move through their systems, though it has stopped short of naming them. Washington is wary of provoking Beijing ahead of a planned meeting between President Trump and President Xi Jinping.
Other levers carry legal or diplomatic hurdles
Other options under discussion include tighter action against exchange houses, mostly based in the United Arab Emirates, that help Iran convert oil proceeds, often received in yuan, into usable currency. Washington could also broaden secondary sanctions to any entity doing business with Iran, an approach modelled on the campaign against North Korea, or move from freezing to confiscating Iranian state assets already within US jurisdiction.
A land blockade would need cooperation from neighbors including Iraq, Turkey and Pakistan, and it faces logistical difficulty given mountainous terrain along parts of Iran's borders. Secondary tariffs on countries trading with Iran, meanwhile, lost their legal underpinning after a Supreme Court ruling.
Oil market treats the threat as a slow burn
Any move against Chinese refiners or banks handling Iranian crude carries a direct oil market consequence. Curbing discounted Iranian barrels would tighten supply and could push prices higher just as the market absorbs an already elevated geopolitical risk premium from the naval blockade.
Traders are likely to treat this as a slow-burn story rather than an immediate catalyst, since Washington has signaled intent without confirming specifics. The China angle is the one to watch most closely: any escalation against Chinese banks risks a tit-for-tat response from Beijing on critical minerals exports, a flashpoint that could ripple well beyond energy markets.
Of the options on the table, targeting Chinese teapot refiners and exchange houses looks the most readily implementable in the near term, since both build directly on measures Treasury has already taken. According to Investinglive: analysts describe much of the existing sanctions regime as a "whack-a-mole" exercise that has yet to shift Iran's strategic calculus.
Source: Investinglive
Trading involves risk.
Risk Disclaimer
