Iran has pledged to hit back after the US Treasury widened sanctions on its oil trade, and China has warned Washington it will retaliate if the measures expand to target Chinese banks. Oil prices fell even as a tanker was struck near the Strait of Hormuz, one of the world's busiest energy chokepoints.
Iran vowed to retaliate after the United States widened sanctions targeting its oil trade. China warned Washington it would take all necessary measures if the sanctions expand further against Chinese firms.
Treasury stops short of hitting Chinese banks
Treasury Secretary Scott Bessent unveiled the new measures on Monday but stopped short of the most punishing sanctions, declining to give a timeline for forcing non-compliant countries out of the dollar-based financial system. The Treasury Department sanctioned 60 individuals, entities and vessels, but the list did not include any of the Chinese financial institutions suspected of facilitating Iran's oil trade. According to Reuters, Bessent said when asked why the measures had not gone further: "Why would I want to blow up the global financial system?"
China warns it will retaliate
Beijing has bought the bulk of Iran's oil for years. But the US blockade of Iran's ports has cut oil flows to China since Washington renewed it in mid-July.
China buys 90% of Iran's oil, and any serious expansion of sanctions on Chinese firms would risk the relationship just a month before presidents Donald Trump and Xi Jinping are due to meet in Washington. That summit is expected to cover extending a one-year truce in their trade war. China's foreign ministry said Tuesday its cooperation with Iran follows international law and should not be disrupted.
Oil slips despite tanker attack near Hormuz
Oil prices fell for a second day as traders brushed off the new sanctions. A tanker was struck by an unidentified projectile near Oman's Ash Shishah, close to the entrance of the Strait of Hormuz. Oil transits through the strait stood at 5 million barrels per day on Monday, down from more than 20 million barrels a day before the war, or roughly one in five barrels consumed worldwide.
Iran signals it is prepared to hit back
Iranian Economy Minister Ali Madanizadeh said Iran was prepared for the new sanctions, adding that neither China nor Russia had accepted the US measures. A spokesperson for Iran's Islamic Revolutionary Guard Corps vowed heavy blows against US interests and energy chokepoints if Iran's infrastructure is threatened.
Despite weeks without major strikes by either side, there is little sign of a diplomatic solution. Pakistan's military said talks with Tehran made significant progress toward reopening the Strait of Hormuz.
Sources: Commodities & Futures News, Financial Times
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