U.S. Treasury Secretary Scott Bessent announced Monday night a campaign aimed at isolating Iran from the global economy, warning that entities that continue doing business with Tehran could face sanctions.
The move is part of Washington’s efforts to cut off the commercial lifeline that has helped keep Iran’s economy afloat during nearly six months of war. While details of the enforcement measures have yet to be finalized, the threat puts the United States on a potential collision course with some of Iran’s main trading partners.
China is considered Iran’s largest buyer of oil, accounting for about 90% of the country’s crude exports. Independent Chinese refineries purchase much of the oil through intermediaries and outside the U.S. dollar system. Beijing has strongly opposed the sanctions, arguing that economic pressure will not resolve the underlying disputes. However, experts estimate that Chinese financial institutions are likely to comply with U.S. sanctions to avoid losing access to the dollar-based financial system and the American market.
The United Arab Emirates, meanwhile, suspended all commercial and financial transactions with Tehran last week after Iran fired two ballistic missiles toward its territory. One of the missiles was reportedly aimed at tankers owned by an Emirati company.
Turkey and Iraq also maintain extensive trade and energy ties with Iran. Turkey imports significant quantities of natural gas from Iran while exporting machinery and agricultural products to its neighbor, and has given no indication that it plans to sever those ties. Iraq, which relies heavily on Iranian electricity and gas to operate its power plants and spends billions of dollars annually on those supplies, could face significant difficulties making energy payments under the new sanctions.
India, one of Iran’s five largest trading partners, resumed crude oil imports from Iran in April after a seven-year hiatus following a temporary easing of U.S. sanctions. However, the future of bilateral trade-including Indian exports of food and medicine-could now be tested by Washington’s threat to sanction Indian refineries that purchase Iranian energy.