Washington says it is preparing to launch its toughest-ever economic campaign against Tehran – and while China has so far rebuffed the White House’s attempt at economic warfare, the threat poses a serious risk to the Islamic regime. It also comes as Iran struggles to contain existing economic problems at home.
Iran’s Shrinking Oil Supply
A U.S. Navy EA-18G Growler prepares to refuel from a U.S. Air Force KC-135 Stratotanker over the U.S. Central Command area of responsibility, March 29, 2025. The Growlers are assigned to the Harry S. Truman Carrier Strike Group supporting maritime security operations in the CENTCOM AOR. (U.S. Air Force photo by Staff Sgt. Gerald R. Willis)
A U.S. Navy F/A-18E Super Hornet aircraft assigned to Strike Fighter Squadron (VFA) 14 participates in an air power demonstration near the aircraft carrier USS John C. Stennis (CVN 74) April 24, 2013, in the Pacific Ocean. The John C. Stennis Carrier Strike Group was returning from an eight-month deployment to the U.S. 5th Fleet and U.S. 7th Fleet areas of responsibility. (U.S. Navy photo by Mass Communication Specialist Seaman Apprentice Ignacio D. Perez/Released)
Offers of Iranian crude for September and October delivery have decreased.
Some barrels are currently being offered at a premium instead of the steep discounts Iran has often used to sell off sanctioned oil. The U.S. naval blockade, reimposed on July 13 following a breakdown of June’s “memorandum of understanding,” has begun to pressure one of Iran’s main routes to hard currency.
Iranian crude currently kept in floating storage outside the blockade zone has plunged from near 105 million barrels before the fresh blockade to about 80 million barrels, according to Kpler data.
Kpler analyst Muyu Xu told Reuters that about 40 million barrels were already on ships in Malaysian waters east of Singapore, but most of that oil has been promised to buyers.
Strait Traffic Slumps
While tankers can turn off their location transponders to avoid detection, Kpler says no supertankers have been spotted transporting Iranian oil in the Strait since mid-July.
Last year, Chinese imports of Iranian crude averaged around 1.4 million barrels a day. They plunged to 785,000 barrels in June, climbed slightly to around 823,000 barrels in July, and have since dropped again to 534,000 barrels per day in August.
Certain independent “teapot” Chinese refiners are already looking elsewhere to secure what they need. Reuters has revealed that one firm bought Brazilian Lapa crude this week, while others are considering importing Iraqi oil.
China currently buys over 80% of Iran’s shipped oil, offering the Islamic Republic a lucrative market outside Western sanctions.
As it stands, Western sanctions have not deterred China from deep trade ties with Iran. It remains to be seen whether Washington’s new plans might change this, or simply prompt the growth of more parallel systems.
Trump Issues Major Threat
On Wednesday, Trump said that the United States plans to unleash its “most crushing economic operation ever taken against any country.” He suggested that measures could include secondary sanctions on countries providing Iran with financial assistance.
“Today, I am also announcing that ANY country that allows its financial institutions, businesses, airports, or government entities to provide any type of lifeline to Iran will itself face TREMENDOUS Economic Consequences,” the President wrote on social media on Wednesday. “Oil smuggling, swap lines, cash transfers, exchange houses, ship registries, front companies. It all needs to stop NOW. You know who you are.”
On Thursday, Treasury Secretary Scott Bessent told reporters that he would hold a press conference next Monday “to talk about exactly what we’re going to do” on Iran.
Bessent said the Trump administration’s pivot toward economic pressure could decrease the likelihood of large-scale military escalation.
He refused to comment on whether Beijing would suffer direct consequences and implied China had an interest in stability, given its reliance on Gulf oil.
The chief of staff of Iran‘s Armed Forces, Major General Ali Abdollahi, has also warned that Iran’s response to fresh sanctions could be broad.
“With preparedness across land, sea, air, air defense, and cyberspace, Iran‘s armed forces will respond to the enemy’s new threats with crushing, punishing, and devastating responses,” he told Iranian state media.
The regime’s President Masoud Pezeshkian has struck a typically aggressive tone, claiming that Iran could now claim victory.
“It is better that we bring the war to an end now, as we are in a position of power and dignity, and the whole world acknowledges our victory and emphasizes that America has attacked our schools, hospitals and infrastructure in violation of all regulations and is hated around the world,” he said on Friday.
UAE Sever Tehran Trade Ties
The economic assault against Iran is already underway. The United Arab Emirates (UAE) said on Wednesday that it had halted all trade and financial transactions with Iran. Before the war, the UAE was Iran’s largest source of imports.
In 2024, about 30% of Iran’s imports came from the UAE, totaling $21 billion.
A recent report published by the Foundation for Defense of Democracies found that the blockade was likely costing Iran around $435 million a day.
Iran’s economy is already facing major issues. In July, the country’s annual inflation hit 66%. Food prices were 128% higher than the same time last year.
About the Author: Georgia Gilholy
Georgia Gilholy is a journalist based in the United Kingdom who has been published in Newsweek, The Times of Israel, and the Spectator. Gilholy writes about international politics, culture, and education.
