Scott Bessent has promised something extraordinary. The United States, he says, is preparing measures against Iran that would be unprecedented in the history of the economic isolation of a country. After almost six months of war, a naval blockade and thousands of existing sanctions, that is an ambitious claim. The interesting question is no longer how much more pressure Washington can place directly on Tehran. It is how much pressure it is prepared to place on everyone still doing business with it. That distinction defines the next phase of the conflict. Iran is already heavily sanctioned. Its oil sector is constrained, its access to Western finance is negligible, its industrial capacity has been damaged, and its ports are subject to an American blockade. Since 2018 alone, the United States has added roughly 2,200 sanctions against Iranian entities and individuals. Yet Tehran continues to export oil, receive payment, finance imports and maintain enough economic activity to resist American demands.
If Bessent genuinely intends to go significantly further, Washington must therefore stop thinking primarily about Iran. It must consider China, banks in third countries, commodity traders, currency intermediaries, shipping companies, insurers, ports, and governments that enable Iranian commerce to survive. Economic isolation is easy to describe. It is much harder to enforce. China is the obvious starting point. It buys more than 90% of Iranian oil exports. That makes Beijing not simply Iran’s largest customer, but the essential economic counterparty keeping Tehran connected to the global energy market. Washington has already sanctioned smaller Chinese refiners and associated companies. It has deliberately stopped short of the step that would really matter: targeting major Chinese banks that finance the trade. That restraint is rational. A sanction on a small refinery is a bilateral enforcement measure. A sanction on a major Chinese financial institution is a confrontation with Beijing. The distinction is enormous.
China has already instructed domestic companies not to comply with some American measures. Its banks can therefore find themselves caught between contradictory legal obligations: comply with Beijing and risk losing access to the American financial system, or comply with Washington and violate instructions from their own government. This is where sanctions cease to be a technical instrument and become geopolitical coercion. Bessent’s problem is consequently not a shortage of possible measures. It is hierarchy. How important is Iran relative to China? Washington cannot maximise pressure on Tehran while simultaneously minimising friction with Beijing. At some point, those objectives conflict. A sufficiently aggressive campaign against Iranian oil exports would almost inevitably require the United States to confront Chinese entities whose economic significance far exceeds Iran’s. And that raises the stakes dramatically.
The same logic applies to Iran’s financial intermediaries. Selling oil is only the first stage of the transaction. Iran must then receive payment, often in renminbi, and convert or transfer those revenues into forms that can finance imports and domestic activity. Exchange houses, particularly in regional financial centres such as the United Arab Emirates, therefore perform an essential function. They are not glamorous institutions. They may nevertheless be more important than another sanctioned tanker. Washington has already targeted some of these networks, accusing them of helping move billions of dollars on Iran’s behalf. The attraction of intensifying that campaign is obvious. If Iran can sell oil but cannot efficiently repatriate or use the proceeds, the economic value of those exports declines significantly. But here again the problem is adaptation. Close one exchange house and another intermediary emerges. Restrict one currency and transactions migrate towards another. Push flows outside formal banking and informal settlement networks expand. The objective is therefore not simply identifying prohibited transactions. It is making circumvention progressively more expensive. That is a different strategy.
Washington could threaten any company, bank or government maintaining meaningful commercial relations with Iran with restricted access to the US financial system. That would force counterparties to make a calculation. Is the Iranian relationship valuable enough to justify risking access to America? For most commercial institutions, the answer would be no. This is the source of American leverage. But the further Washington expands the perimeter, the more allies and strategically important partners it risks capturing inside it. Turkey trades with Iran. Gulf financial centres process regional transactions. Asian companies purchase energy. Russian and Chinese entities have their own strategic reasons to resist American pressure. A maximalist sanctions regime would therefore no longer be aimed only at an adversary. It would impose choices on neutral countries and allies. That is where enforcement becomes politically expensive. Trump has previously threatened to impose 25% tariffs on countries trading with Iran. Applied literally, such a policy would represent something close to an economic quarantine. But it would also create extraordinary distortions. Companies would have to redesign supply chains. Governments would seek exemptions. Customs enforcement would become complicated. American importers would face higher prices. And the distinction between sanctions policy and trade policy would become increasingly difficult to maintain. The larger the sanctions perimeter, the more economic relationships Washington must police.
Washington therefore has powerful instruments, but few without consequences. The shadow fleet offers another route. Iran has spent years developing opaque maritime networks using ageing tankers, shell companies, flag changes, ship-to-ship transfers and complex ownership structures. American sanctions have already targeted individual vessels. A stronger approach would attack the ecosystem rather than the ships. This could be effective. But again, enforcement would increasingly occur outside Iran. A vessel does not need access to New York to move oil between Iran and China. Destroying the shadow fleet therefore means persuading or coercing dozens of jurisdictions and commercial actors to stop supporting it. The campaign becomes global by definition.
This explains why Bessent’s promised measures represent a test not simply of Iran’s economic resilience, but of American extraterritorial power. The United States is trying to determine how much control it still exercises over commercial decisions made beyond its borders. That is a much larger question. The dollar system gives Washington enormous reach because international banks value access to American clearing, capital markets and counterparties. But financial power works most efficiently when the threat of exclusion is enough. Once countries consciously begin testing that threat, enforcement becomes harder.
At the same time, Hormuz remains unstable. Iran and Oman appear to be making progress towards a maritime arrangement covering navigation routes through the Strait, but Tehran has explicitly separated such an agreement from a full reopening. The United States is not directly participating in those negotiations, and Washington is unlikely to accept an arrangement that gives Iran significant control over commercial passage. The diplomatic process therefore creates another contradiction. Washington is trying to economically isolate Iran while Oman is negotiating with Tehran over the practical governance of the world’s most important energy corridor. Iran may be financially isolated in one sense while becoming operationally indispensable in another. That is precisely why Hormuz remains such powerful leverage. The Strait has suffered dozens of maritime incidents during the conflict, with commercial vessels hit and crews killed. Attacks have continued even while talks progress. Any agreement on navigation could reduce some immediate shipping risk.
It would not resolve the underlying competition over who determines the rules. This is where the economic and maritime strategies converge. Washington wants control without recognising Iranian authority. Tehran wants recognition of its authority as the price of normalisation. Neither side has yet found a structure allowing both to claim success. Bessent’s sanctions campaign, therefore, cannot be separated from diplomacy. If economic pressure becomes severe enough, Washington hopes Tehran will compromise.
The real question is therefore not whether America can isolate Iran. It can make Iran significantly more isolated than it is today. The real question is what Washington is prepared to disrupt in order to achieve it. Chinese financial relationships. Trade with regional partners. Global oil supply. Shipping networks. Reserve-management conventions. Relations with governments that do not want to choose sides. At that point, economic isolation stops being an Iran policy. It becomes a test of how far the United States can reorganise global commerce to align with its strategic priorities. Bessent may therefore be preparing the most aggressive phase yet of America’s campaign against Tehran. But the decisive battlefield will not necessarily be inside Iran. It will be everywhere else.