US weighs harsher Iran squeeze despite economic blowback

The United States is contemplating a more stringent economic embargo against Iran, with Treasury Secretary Scott Bessent hinting at unprecedented measures while acknowledging the potential risks to energy markets, China relations, and the U.S. economy. Bessent announced forthcoming steps, describing the strategy as both financially isolating and maintaining a blockade on Iranian ports.

Specific targets include foreign banks, refiners, traders, and intermediaries that continue to handle Iran's finances despite sanctions. Washington has threatened secondary sanctions on foreign institutions involved in prohibited transactions, which could limit their access to the U.S. financial system. Chinese oil refiners, in particular, are under increased scrutiny due to their role in absorbing Iran's sanctioned crude.

Since February 2025, over 1,000 Iran-related entities have been sanctioned, including shipping firms, vessels, and individuals. Treasury has also targeted digital assets, freezing nearly half a billion dollars in cryptocurrency linked to Tehran. The next phase may involve more extensive financial infrastructure, such as front companies, correspondent banking relationships, and payment intermediaries.

Iran's overseas commercial fronts, linked to the Islamic Revolutionary Guard Corps, are also under increased scrutiny. Despite these pressures, Iran's oil output has sharply declined, and its economy is grappling with hyperinflation. The U.S. faces a challenging decision between deepening economic sanctions and the risk of disrupting global oil markets, which could lead to higher energy prices and potentially fuel domestic political tensions.