The pressure is no longer confined to battlefields or diplomatic rooms. It is now being applied through tankers, ports, and payment systems. With a fresh round of sanctions, the administration of Donald Trump has widened its effort to choke off Iran’s oil trade, targeting not only shipments but also the network that moves and processes them. The latest measures reach deep into China’s refining sector and across a web of shipping companies that carry crude across oceans.
The announcement, led by Scott Bessent, marks a step that goes further than previous actions. Instead of focusing only on Iranian entities, the United States has moved against foreign firms accused of enabling those exports. That approach, often described as secondary sanctions, seeks to force compliance not through direct control but through the weight of the U.S. financial system.
The timing adds another layer. The measures come just weeks before a planned meeting between Trump and Xi Jinping, placing economic pressure at the centre of a relationship already shaped by trade disputes and strategic rivalry.
Sanctions reach beyond Iran’s borders
At the centre of the latest action is Hengli Petrochemical, a large independent refinery based in Dalian. With the capacity to process hundreds of thousands of barrels of crude each day, the facility is a major player in China’s energy market. U.S. officials say it has received Iranian oil shipments for several years, generating revenue that they link to Iran’s military.
Alongside the refinery, roughly 40 shipping companies and tankers have been named. These vessels form part of what officials describe as a network used to move Iranian oil to buyers while masking its origin. Such methods are not new. Oil shipments can be transferred between vessels, relabelled, or routed through intermediaries to obscure their source. The practice has grown in response to earlier sanctions, creating a complex chain that is difficult to track in real time.
By targeting both the buyers and the carriers, the United States is aiming to disrupt that chain at multiple points. The strategy rests on a simple premise. If refiners, banks, and shipping firms risk losing access to the U.S. financial system, many will choose to cut ties with Iranian oil rather than face penalties.
Bessent made that point clear in public remarks. He said the aim is to constrain the vessels, intermediaries, and buyers that Iran relies on to move its oil. Earlier this month, the Treasury Department sent warnings to financial institutions in China, Hong Kong, the United Arab Emirates, and Oman, signalling that further action could follow.
These warnings are not merely symbolic. Access to dollar transactions and U.S. markets remains central to many international businesses. Even companies based outside the United States often depend on that access for financing and trade. Losing it can carry costs that extend far beyond a single shipment of oil.
The inclusion of a major Chinese refinery raises the stakes. China has been one of the largest buyers of Iranian crude, often importing it through indirect channels. Smaller refineries, sometimes referred to as “teapot” operators, have played a role in these purchases, attracted by discounted prices. The sanctions now place a larger, more visible facility under scrutiny, signalling a willingness to target high-profile entities.
Chinese officials have previously criticised such measures, arguing that they disrupt normal trade and infringe on the rights of companies. While large Chinese firms often comply with U.S. restrictions to protect their broader interests, the political response tends to be sharper, especially when sanctions are applied unilaterally.
Energy markets caught between pressure and supply
The sanctions come at a time when the flow of oil through the Persian Gulf is already under strain. The United States has also taken steps to enforce a blockade in the Strait of Hormuz, a narrow passage that handles a large share of the world’s crude shipments. Together, these actions tighten both the movement and the destination of Iranian oil.
For energy markets, the effect is immediate. Prices have risen as traders factor in reduced supply and increased risk. The movement of oil is not only about availability but also about confidence. When routes are uncertain or shipments face interruption, buyers and sellers adjust their behaviour, often pushing prices higher.
The U.S. administration has attempted to manage that effect through limited waivers. Temporary allowances have been granted for certain shipments, including Russian oil, and for Iranian cargo already at sea. These steps suggest an effort to apply pressure without triggering a sharp shock to supply.
Still, the broader picture is one of tightening constraints. Iran relies heavily on oil exports for revenue. Restricting those exports affects not only the country’s economy but also its ability to finance military and government activities. That link between oil income and state spending is central to the rationale behind the sanctions.
Iran, for its part, has maintained that lifting sanctions is a condition for easing tensions. This position has been consistent across different phases of the conflict. The latest U.S. measures move in the opposite direction, increasing pressure rather than reducing it.
The involvement of shipping companies adds another dimension. Maritime trade operates on thin margins and tight schedules. When vessels are sanctioned, they can be denied insurance, port access, or financing. This makes it harder for them to operate, even if they are willing to take on risk. Over time, this can reduce the number of ships available to carry sanctioned cargo.
There is also a broader impact on trade patterns. When one route becomes risky or restricted, shipments are rerouted, often at higher cost. This can affect not only oil but also other goods that rely on the same shipping lanes. The result is a ripple effect that extends through supply chains.
The diplomatic context remains uncertain. The planned meeting between Trump and Xi is expected to cover a range of issues, including trade and security. The sanctions introduce a new point of tension ahead of those talks. Whether they are used as leverage or remain a separate issue is not yet clear.
