Every Iran lever left runs through Beijing, and most of them run through the crude price

Treasury Secretary Scott Bessent says the US is preparing to squeeze Iran with unprecedented economic pressure, a claim critics greeted with skepticism given the country already sits under a naval blockade and thousands of sanctions ^[1]. The administration has not said what it plans to do ^[2], which leaves the arithmetic of the remaining levers as the only useful guide, and that arithmetic points at Beijing.

China buys more than 90% of Iran's oil exports ^[3], meaning every other buyer combined accounts for under a tenth of the flow ^[4]. Penalties on the entities that facilitate those purchases would directly reduce Tehran's oil revenues ^[5]. Washington has already sanctioned some Chinese teapot refineries and firms since the US began its war against Iran in late February ^[6], but it has stopped short of the major Chinese banks that finance the trade ^[7]. That is the unused lever, and it is unused for reasons that have little to do with Iran.

There are two costs. Hitting Chinese companies or financial institutions risks worsening tensions with Beijing ahead of a planned meeting between Trump and Xi Jinping ^[8]. And curtailing Iranian barrels removes discounted crude from the global market, which could lift already elevated oil prices ^[9]. Sanctioning the banks is therefore a wager that a domestic energy price increase is worth the revenue Tehran loses.

Beijing has already shown its response. In May it ordered domestic companies not to comply with US sanctions on five refiners, leaving its biggest banks caught between that directive and the risk of losing access to the US financial system ^[10]. As Bloomberg Economics analyst Chris Kennedy put it, unless the president decides to prioritize the Iran threat over all other issues, namely China, it is unlikely any action materially changes Iran's calculus ^[11].

The alternatives are smaller versions of the same problem. Exchange houses in countries such as the United Arab Emirates help Iran convert oil payments, often received in yuan, into currencies it can actually use ^[12]; Treasury has already sanctioned some as part of Bessent's "Economic Fury" campaign over the alleged laundering of billions of dollars ^[13], but Iran has spent years building alternative channels, and cutting off named intermediaries tends to push transactions toward new ones, new currencies or digital assets rather than stopping them ^[14]. Broad secondary sanctions on any entity doing even limited business with Iran, the approach Trump took toward North Korea in 2017 ^[15], would extend reach beyond the oil trade but would also land on firms and banks in countries around Iran's borders, including the US partner Turkey ^[16]; Trump has already floated a version of this, threatening 25% tariffs on countries conducting business with Iran, and has not followed through ^[17]. Confiscating rather than freezing Iranian state assets, as the Bush administration did after the 2003 invasion of Iraq ^[18], runs into a possibly limited pool inside US jurisdiction and the need for foreign cooperation over wealth held in third countries ^[19]. And expanding shadow-fleet designations from vessels to the companies, terminals and infrastructure behind them ^[20] is enforcement work layered on a blockade that has already reduced traffic to Iran's ports ^[21].

Watch whether a designation names a large Chinese commercial bank rather than another teapot refiner or vessel list, and whether the 25% tariff threat is ever executed ^[17]. The bank version is the only one that moves Iranian revenue at scale, and it will price through to crude before it prices through to Tehran.