US Threatens Sanctions on Countries Buying Iranian Oil Amid China Tensions

US Treasury Secretary Scott Bessent warned on August 24, 2026, that countries buying oil from Iran risk facing severe economic sanctions. This announcement primarily targets China, the world's largest consumer of Iranian oil, amid ongoing geopolitical tensions.

Experts estimate Iran shipped between $3.9 billion and $4.2 billion in oil in September 2025, with China accounting for roughly 90% of these exports. This revenue significantly supports Iran’s government and military activities, according to the US-China Economic and Security Review Commission.

Bessent emphasized the US approach relies on diplomacy and clear communication of expectations to every country involved. "We find that the best way to engage with countries is through quiet diplomacy, and we are level-setting with every country to tell them our expectations," he said. "We know who they are.

They know who they are." These remarks served as a warning shot rather than announcing broad sanctions targeting specific nations.

Chinese Foreign Ministry spokesman Lin Jian responded, stating, "Sanctions and pressure tactics do not help in resolving issues. They will only lead to escalation that serves no one’s interest." China has already reduced Iranian crude imports from about 1.4 million barrels per day before the conflict to roughly 700,000 barrels in recent months due to lower refinery runs and inventory drawdowns, according to energy analytics firm Vortexa.

Energy analyst Tianyue Hu noted that a complete halt to Iranian crude imports would likely have limited immediate impact on China’s oil security due to existing stockpiles. "Imports from Iran have already fallen substantially and China still holds relatively large crude inventories," Hu said.

The US has previously targeted Chinese banks and refiners connected to Iranian oil, but broader sanctions remain politically sensitive as US-China relations are fragile following recent trade tensions and tit-for-tat sanctions exchanges. Daniel Tannebaum, a senior fellow at the Atlantic Council, stated, "China, by far, is the most impactful one if you really wanted to make a dent in Iran’s ability to continue to finance their activities."

China's independent "teapot" refineries, which serve domestic markets and buy discounted crude, have been primary buyers of Iranian oil, often labeling shipments as Malaysian or Indonesian and settling in Chinese currency.

Despite US efforts, overall Iranian oil flows to China have only modestly declined, with shipments fluctuating amid renewed US blockades and the ongoing conflict. According to ship-tracking data, shipments dropped to 785,000 barrels per day in June 2026 but rose slightly to 823,000 in July before falling again to 534,000 in August.

Bessent warned that no entity is beyond the reach of US sanctions. "No one is above the reach of US sanctions," he said, while avoiding specific timelines for enforcement actions. Chinese leader Xi Jinping is expected to visit the US next month, adding a diplomatic dimension to the tensions.

The conflict also affects global oil supply routes. Approximately 38% of China’s oil and 23% of its liquified natural gas transit through the Strait of Hormuz, a key conflict zone. Ship-tracking platforms report increased use of shadow fleets that obscure oil shipment origins and destinations, complicating monitoring efforts.

American consumers face higher energy costs linked to the conflict, with current gas prices averaging $4.10 per gallon compared to $3.15 last year, according to AAA.

Iranian Economy Minister Ali Madanizadeh dismissed the sanctions, stating that Iran and its allies have not accepted the measures and possess tools to counter economic pressure. "Naturally, the enemies intend to launch an economic terrorist attack on us, but we also have our own tools and know how to play the game," he said.