How the US could squeeze Iran with economic isolation – and the risks involved

Treasury Secretary Scott Bessent says the US is getting ready to squeeze Iran with unprecedented economic pressure, a claim critics greeted with scepticism given the country is already subject to a naval blockade and thousands of sanctions.

While the Trump administration has not said what it is planning to do, there are still pressure points that Bessent’s Treasury Department could hit. The main challenge is that targeting the remaining options risks blowback on the US economy.

“Unless the president decides to prioritise addressing the Iran threat over all other issues, and namely China, it’s unlikely any action they take is going to materially change Iran’s calculus,” Bloomberg Economics analyst Chris Kennedy said.

Below is a look at a few options. They are far from exhaustive and it remains unclear which, if any, the administration will pursue. Officials could combine several of these measures or opt for a different approach altogether.

China buys more than 90 per cent of Iran’s oil exports. Penalties on entities that facilitate these purchases would directly reduce Tehran’s oil revenues.

Washington has already sanctioned some Chinese teapot refineries and firms since the US started the war against Iran in late February. But so far, the US has stopped short of targeting the major Chinese banks that finance the trade.

The risk is that hitting Chinese companies or financial institutions risks worsening tensions with Beijing ahead of a planned meeting between US President Donald Trump and Chinese leader Xi Jinping. There is also an economic trade-off, since curtailing Iranian barrels would remove discounted crude from the global market and could lift already elevated oil prices.