United States Announces Sanctions on Oil Trader and Warns Iran Trade Partners

The United States has sanctioned the oil trader Wellbred due to links with Iran. In a broader announcement on Monday, US Treasury Secretary Scott Bessent vowed an economic D Day for countries that continue to buy oil from Iran. While Bessent did not name specific nations, he stated that the US knows who the buyers are and is engaging in quiet diplomacy to communicate expectations.

Analysis indicates that China is the primary buyer of Iranian oil, accounting for roughly 90 percent of exports. According to the US China Economic and Security Review Commission, these purchases provide tens of billions of dollars in annual revenue for Iran's government and military. Chinese Foreign Ministry spokesman Lin Jian responded by stating that sanctions and pressure tactics do not help resolve issues and only lead to escalation.

Experts suggest the impact on China may be limited because Iranian crude imports have already fallen from 1.4 million barrels per day to around 700,000 in recent months. However, further sanctions could strain the relationship between the US and China following previous trade wars and tariffs. Other nations have been affected in the past, such as India, which stopped importing Iranian oil in 2019 due to US sanctions.

Tracking the actual flow of oil remains difficult due to shadow fleets. Kpler reported that shadow transit made up around 50 percent of traffic through the Strait of Hormuz in recent weeks, up from 12.5 percent a month ago. This complicates efforts to determine the exact impact of US sanctions.