US Expands Iran Sanctions, Risking China's Access to Dollar System

The United States has expanded sanctions aimed at cutting Iran's oil revenue, putting its biggest buyer, China, at risk of being cut off from the dollar-based financial system. Washington has so far avoided directly sanctioning Chinese banks, however, due to concerns about possible economic retaliation from Beijing. The US administration has broadened sanctions targeting Iran's economic resources, calling on countries to end commercial ties with Tehran and warning that those who do not comply could lose access to the dollar-based financial system.

US Treasury Secretary Scott Bessent said no country or financial institution is beyond the reach of American sanctions and asked Beijing to cooperate on trade with Iran. China's crude oil imports from Iran fell sharply, according to ship-tracking data from Kpler. Imports stood at 1.57 million barrels per day in February and 1.47 million in March. After the US reimposed a blockade on Iranian ships and ports in July, shipments dropped markedly, falling to 785,000 barrels per day in June, the lowest level since February 2023. Shipments rose to 823,000 barrels per day in July but have fallen to 534,000 so far in August.