The administration of U.S. President Donald Trump is promising a new phase of economic pressure on Iran, with Treasury Secretary Scott Bessent suggesting that Washington will announce unprecedented measures in the coming days to economically isolate a country.
Exactly what those measures will entail remains unclear. However, experts who spoke to Radio Free Europe said that a truly unprecedented move could go beyond another round of sanctions against Iranian companies and target the international financial and trading networks that have enabled Tehran to continue selling oil despite decades of U.S. pressure.
This could include Chinese banks, yuan-denominated payments for Iranian oil, alternative payment systems, as well as shipping, insurance and refining companies and financial intermediaries involved in the trade.
“Keep your eyes here for more announcements next week, because we will implement measures unlike anything ever seen before in the history of economically isolating a country,” Bessent said in an August 13 interview with Newsmax. He said the measures would form part of a “two-pronged strike,” alongside the continued blockade of Iranian ports.
Trump reinforced those remarks the following day by reposting a Newsmax report about them on Truth Social.
The White House has provided few details. Asked on August 14 about the expected measures, spokesperson Karoline Leavitt said that “we have other tools available that we can use to continue to punish Iran and cripple its economy, which is already in a very poor state.”
The administration says Iran is facing rising inflation, declining energy revenues, widespread poverty and limited access to foreign currency. A Pentagon assessment cited by The Hill found that the first phase of the U.S. blockade, from April 13 to June 18, cost Iran approximately $4.8 billion in oil revenues.
The question now is where Washington can apply pressure that it has not already tried — and whether the measures it adopts can change Tehran’s calculations.
Targeting Vital Financial Channels
Elaine Dezenski, head of the Center on Economic and Financial Power at the Washington-based Foundation for Defense of Democracies, told Radio Free Europe that one potentially powerful option would be targeting jurisdictions and financial institutions that facilitate payments for sanctioned Iranian oil.
She pointed to places such as Hong Kong and banks that may be linked to transactions involving sanctioned oil while simultaneously relying on dollar- or euro-denominated activity and correspondent relationships with Western financial institutions.
Such a move would focus on what Dezenski called “financial facilitation nodes” that enable the trade to function.
Another possibility, she said, could involve the use of a provision of the Patriot Act through which Washington could potentially identify certain transactions for Iranian oil settled in Chinese yuan as transactions of primary money-laundering concern.
Iranian oil trading is increasingly linked to payment mechanisms outside the traditional Western financial system. Transactions can be settled in yuan and processed through alternative systems, including China’s Cross-Border Interbank Payment System, or CIPS, and Russia’s System for Transfer of Financial Messages, known as SPFS.
For Dezenski, Iranian oil sales and the growth of alternative financial infrastructure are becoming part of the same problem. She said this trade helps strengthen yuan-based settlements and payment systems outside the Western financial system, potentially contributing to a broader effort to reduce the dollar’s role in global energy transactions.
“I believe that at this stage, the two are really operating in coordination,” she said.
Brett Erickson, a sanctions expert at the U.S. company Obsidian Risk Advisors, said one measure would represent a significant escalation beyond the sanctions Washington has imposed so far.
“Sanctioning Chinese banks would represent an entirely different level of escalation,” he told Radio Free Europe. The Treasury Department, Erickson said, has long known that it has such leverage available, but has avoided using it because of the potential consequences for the United States and the global financial system.
“If Bessent intends to achieve economic isolation on a scale we truly have not seen before, this is where I would look first,” Erickson said.
China and the Limits of Alignment
China has been the main buyer of sanctioned Iranian oil, making it essential to Tehran’s ability to generate revenue. But Dezenski, co-author of Axis of Aggressors, warned against treating the economic relationship between China, Iran, Russia and North Korea as an unbreakable alliance.
The cooperation is “real and consequential,” she said, but it is also opportunistic. China has an interest in buying Iranian oil, but must take into account its much larger economic relationships with the United States and other Western markets.
Iranian oil accounts for a relatively small share of China’s imports and could be replaced, she said. This could limit the level of risk Beijing is willing to take to protect Tehran.
“There is a point at which the economic alignment really starts to fracture,” Dezenski said.
She cited previous U.S. measures against independent Chinese refineries, known as “teapots,” involved in purchasing Iranian oil. Beijing publicly opposed the sanctions, but Chinese banking regulators later instructed major state-owned banks to stop lending to affected refineries, she said.
This demonstrates that U.S. sanctions can have consequences even when China publicly opposes them, she said.
The next step could be examining the broader ecosystems surrounding these refineries, including corporate structures, asset-owning companies and other businesses involved in refining and distributing petroleum products.
“Sanctions on the ‘teapot’ refineries have an impact,” Dezenski said.
However, shutting down a refinery or blocking an oil shipment is different from dismantling the entire network. Iranian oil can move through a web of traders, vessels, companies, refineries, financial intermediaries and insurers. Pressure on one part of the system may simply encourage efforts to circumvent restrictions elsewhere.
Dezenski said the most effective approach would be multi-layered, targeting banks, shipping, maritime insurance and payment infrastructure simultaneously rather than relying on a single new sanctions tool.
There is also a long-term concern. As more financial institutions connect to systems such as CIPS, Washington could face a growing challenge to its ability to use access to the dollar-based system as a source of leverage. Dezenski said that, for this reason, there could be strategic value in targeting this infrastructure while it is still developing.
Can Economic Pain Produce Results?
The more difficult question is whether even an unprecedented escalation would force Tehran to accept Washington’s demands.
Barry Pavel, a former senior director for defense policy and strategy at the National Security Council, told Radio Free Europe that although he does not know what measures Bessent is preparing, sanctions campaigns often become progressively tougher rather than immediately reaching their maximum scope.
Pavel emphasized that he was speculating when discussing possible measures, such as broader restrictions on trade and finance. Iran, he said, has spent decades learning how to evade sanctions, while its closer ties with China and Russia could provide additional avenues for circumventing future restrictions.
More importantly, Pavel questioned whether inflicting widespread economic hardship would necessarily change the calculations of Iran’s leaders.
The United States has imposed sanctions on Iran in various forms since the 1979 Islamic Revolution. A major escalation could cause significantly greater damage, Pavel said, but it is unclear whether that would translate into the diplomatic concessions Washington is seeking.
“I’m not sure about that,” he said.
Iran’s leadership has long defined itself through resistance, Pavel argued. “They don’t need to win. They don’t need to defeat the United States. They simply need to survive and manage to prolong their resistance to the United States until the United States, you know, from their perspective, leaves,” he said.
This makes resilience a central part of the equation. The question is how much pain the population and leadership can withstand before those in power decide that the cost has become too high.
Pavel said he would prefer a more targeted approach focused on decision-makers and the things they value most. Broad economic pressure, he warned, could impose significant costs on ordinary Iranians without placing comparable pressure on the political elite.
He questioned whether such suffering would persuade Iranian decision-makers to stop using the Strait of Hormuz as a tool of pressure and abandon their nuclear ambitions, as the Trump administration demands.
A Race Against Time?
Erickson drew a similar distinction between economic weakness and political vulnerability.
“Iran can withstand an extraordinary amount of economic pain,” he said. The population could become significantly poorer and the economy could deteriorate severely while the government remains in power.
For Erickson, the decisive test is whether the government loses its ability to maintain control.
This creates a contradiction in U.S. strategy, he said. Washington needs economic pressure to weaken the relationship between the Iranian people and their government, but pressure from an external adversary can also strengthen the incentive to rally around the state.
“We have spent enormous resources trying to make Iran economically vulnerable, while at the same time doing almost everything possible to make its population politically resilient,” Erickson said.
He also argued that Washington needs more than another point of pressure: it needs time.
Every week that global markets can absorb disruptions to energy flows, higher shipping costs and broader instability gives economic pressure more time to affect Iran. But if the economic consequences for the rest of the world become unbearable first, Erickson said, the strategy could fail regardless of how extensive the measures are.
“If the rest of the world reaches its breaking point before Tehran does, it doesn’t matter how comprehensive the economic war is — the strategy fails.”
