U.S. Treasury weighs additional sanctions on Iran amid concerns over China and global oil markets

U.S. Treasury officials are reviewing a range of options to increase economic pressure on Iran, though they acknowledge that many of these steps could have unintended consequences for the United States. Analysts note that any action would need to balance the goal of curbing Tehran's oil revenue against the risk of higher global oil prices and strained ties with China.

One focus is China, which purchases more than 90% of Iran's oil exports. Sanctioning entities that facilitate these sales could cut Iranian revenues, but targeting major Chinese banks or corporations may worsen U.S.-China relations ahead of a planned summit between President Donald Trump and Chinese President Xi Jinping. The move could also reduce the supply of discounted crude on the world market, potentially pushing oil prices higher.

Another avenue involves exchange houses in the United Arab Emirates and other jurisdictions that convert Iranian oil payments, often received in Chinese yuan, into usable currencies. The Treasury has already sanctioned several such firms, describing them as channels for laundering billions of dollars. While this could limit Iran's access to funds, officials expect Tehran to shift transactions to alternative intermediaries, currencies or digital assets.

The United States could also expand secondary sanctions on foreign companies that conduct even limited business with Iran, a strategy similar to the 2017 sanctions on North Korea. Such measures would force firms worldwide, including those in Russia, China, Turkey and other neighboring states, to choose between Iranian trade and access to the U.S. financial system. President Trump has previously suggested imposing a 25% tariff on countries that do business with Iran, though no final decision has been made.

Seizing Iranian state assets held under U.S. jurisdiction is another possibility, echoing a post-2003 Iraq precedent. However, most of Iran's overseas wealth is located in third-country banks, requiring foreign cooperation and raising legal complexities.

Finally, the Treasury may broaden actions against the so-called “shadow fleet” that transports Iranian oil, targeting not only individual vessels but also the companies, terminals and infrastructure that support them. The United States has already placed sanctions on several ships and related entities.

"Unless the president decides to prioritize 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," said Bloomberg Economics analyst Chris Kennedy.