US Treasury's Iran squeeze plan targets Chinese banks, shadow fleets

Treasury Secretary Scott Bessent says the US is readying unprecedented economic pressure on Iran, but skeptics question what's left after a naval blockade and thousands of existing sanctions. The Trump administration hasn't revealed its next steps, yet the Treasury has several remaining levers. The key challenge is that any escalation risks blowback on the US economy, according to Bloomberg Economics analyst Chris Kennedy: "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."

A primary target is China, which buys more than 90% of Iran's oil exports. Washington has already sanctioned some Chinese teapot refineries and firms since the US began its war against Iran in late February, but it has stopped short of hitting the major Chinese banks financing the trade. Penalties on those entities could directly reduce Tehran's oil revenues, yet they risk worsening tensions with Beijing before the planned Trump-Xi meeting. Additionally, curbing Iranian barrels would remove discounted crude from the global market, potentially lifting already elevated petrol prices. Other pressure points include shadow fleets — ships that disguise their cargo origins — and exchange houses used to launder oil payments, both of which would face secondary sanctions but carry similar risks of economic retaliation and market disruption.