Iran vows retaliation after US widens sanctions

CAIRO/WASHINGTON — Iran has vowed to fight back against Washington’s latest economic offensive, warning that expanded US sanctions will not force Tehran into submission as Pakistan steps up efforts to revive stalled diplomacy and reopen the strategically vital Strait of Hormuz.

The escalation came after US Treasury Secretary Scott Bessent announced a broader sanctions campaign on Monday, threatening countries and companies that continue doing business with Iran with exclusion from the dollar-based financial system.

The measures included sanctions against about 60 individuals, entities and vessels linked to Iran’s oil trade and other activities. But Washington stopped short of immediately targeting major Chinese financial institutions suspected of helping facilitate Iranian oil purchases.

Bessent also declined to identify which countries could face secondary sanctions or provide a timetable for enforcement, saying Washington would first give governments and companies time to comply.

Asked why the administration had not moved immediately against larger financial institutions, Bessent offered a blunt explanation:

“Why would I want to blow up the global financial system?”

He nevertheless warned that the reach of the US sanctions system was not limited by geography.

“We want to make clear here today that no one is above the reach of US sanctions,” Bessent said.

Tehran promises a response

Iranian officials responded with defiance, portraying the US measures as an economic assault that Tehran had anticipated and prepared to withstand.

Economy Minister Ali Madanizadeh said Iran was ready for the new sanctions.

“We are fully prepared for the US sanctions,” he said.

Madanizadeh told state television that Tehran had its own means of responding to the 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. Our defence is no longer so defensive; the enemies should wait for an attack.”

He also said neither China nor Russia had “accepted” the American measures, expressing confidence that other countries would resist Washington's attempt to isolate Tehran.

The warning was reinforced by Brigadier General Hossein Mohebbi, a spokesperson for Iran's Islamic Revolutionary Guard Corps, who threatened attacks against US interests and energy chokepoints if Iranian infrastructure comes under threat.

The rhetoric reflects Tehran's longstanding strategy of using its influence over regional energy routes as leverage against American pressure.

China becomes the critical test

The biggest question surrounding Washington's campaign is whether it will ultimately move against Chinese banks and companies that continue purchasing Iranian oil.

China has remained Iran's most important oil customer, and Beijing has already rejected the principle of Washington imposing its sanctions on third countries.

Chinese Foreign Ministry spokesperson Lin Jian said Tuesday that Beijing firmly opposed unilateral sanctions that lack international legal or UN Security Council backing.

“Economic warfare and maximum pressure do not help solve problems,” Lin said, warning that such measures could escalate tensions, create spillover risks and disrupt the global economic and financial order.

China, he added, would take “all necessary measures” to protect its legitimate interests.

The Chinese position places Washington in a delicate position. Punishing major Chinese banks could significantly tighten the financial squeeze on Iran, but it could also provoke retaliation from Beijing and widen an already tense US-China economic relationship.

Analysts have pointed to the timing as particularly sensitive, with President Donald Trump and Chinese President Xi Jinping expected to hold talks next month.

For now, Washington appears to be keeping the most consequential financial weapons in reserve.

Pakistan opens another diplomatic channel

While the economic confrontation intensifies, diplomatic activity has picked up around a conflict that is approaching its six-month mark.

Pakistan's military said Tuesday that Army Chief Field Marshal Asim Munir's discussions in Tehran had made “significant progress”, with talks focusing on preventing another escalation and restoring shipping through the Strait of Hormuz.

Interior Minister Mohsin Naqvi, who accompanied Munir to Tehran, said Iranian President Masoud Pezeshkian had openly presented his government's position.

“The Iranian president candidly shared his government’s perspective and we had a very constructive exchange on the issues involved,” Naqvi said on X.

The Pakistani delegation's mission comes after an earlier US-Iran interim understanding, known as the Islamabad memorandum, failed to hold.

Iran has reportedly conveyed its conditions for restoring the agreement, including provisions concerning safe commercial passage through Hormuz.

Qatar, another regional mediator, said Tuesday that its officials were also speaking with the parties daily in an effort to find a route back to negotiations.

Qatari Foreign Ministry spokesperson Majed Al-Ansari said officials were “on the phone on a daily basis trying to workshop ideas” for restarting the talks, while urging Iran to immediately restore freedom of navigation through Hormuz.

Hormuz remains the pressure point

The diplomatic push is taking place against the backdrop of a continuing shipping crisis.

The Strait of Hormuz is one of the world's most important energy corridors, carrying a substantial share of global crude oil and liquefied natural gas shipments before the war disrupted normal traffic.

Only a handful of commercial vessels have recently managed to pass through the waterway, underscoring the continuing risk to international energy supplies.

The standoff has also begun producing new diplomatic proposals. Iran and Oman have been discussing a phased system for managing traffic through the strait, including a possible temporary navigation corridor and arrangements for mine clearance.

For Tehran, control over or disruption of Hormuz remains one of its strongest sources of leverage. For Washington and Gulf states, restoring unrestricted navigation has become an essential condition for stabilising energy markets and reducing the risk of a wider regional confrontation.

Six months of war, no clear exit

The latest sanctions come after months of military confrontation that have inflicted severe damage on Iran but failed to produce a decisive political settlement.

The conflict has degraded Iran's conventional military capabilities and imposed substantial economic costs. Yet Tehran retains missile and drone capabilities capable of threatening US forces, regional allies and commercial shipping.

The condition of Iran's nuclear programme also remains uncertain, despite US and Israeli efforts to destroy or severely constrain it.

The result is a conflict in which military pressure has failed to deliver a clean victory, sanctions have failed to force immediate capitulation and diplomacy has repeatedly stalled.

That has left Washington increasingly dependent on economic pressure.

The new campaign, which Treasury officials have presented as an effort to cut Iran's remaining international financial lifelines, is therefore being tested against a simple question: can the United States convince Iran's biggest trading partners to abandon Tehran without triggering a wider economic confrontation?

China's response suggests that will be difficult.

And Iran's threats indicate that Tehran has no intention of surrendering quietly.

For now, the battlefield has expanded from missiles and military bases to banks, oil shipments, financial networks and the narrow waters of Hormuz — with Pakistan and other regional mediators racing to find a diplomatic off-ramp before the next escalation.