Iran vows to retaliate after US widens sanctions
By Yasmine Ghania and David Lawder
CAIRO/WASHINGTON, Aug 25 (Reuters) - Iran promised to retaliate against expanded U.S. sanctions that the Americans said would cut Iran's economic lifeline, with Tehran expressing confidence that major trading partners would resist Washington's pressure campaign.
U.S. Treasury Secretary Scott Bessent unveiled the measures on Monday but stopped short of the most punishing sanctions, saying countries that continued trading with Iran risked being forced out of the dollar-based financial system.
Bessent declined to identify the countries that would be targeted or reveal when the penalties would take effect, saying he would instead give them time to comply with the new directive. The Treasury Departmentdid announcenew sanctions on 60 individuals, entities and vessels, but the list did not feature any of the Chinese financial institutions suspected of facilitating Iran's oil trade.
Iran and the United States signed an interim deal in June aimed at ending the war that began with U.S. and Israeli attacks on Iran, but the Islamabad memorandum, as it is known, quickly faltered.
Mediator Pakistan made "significant progress" in the latest talks with Tehran that focused on measures such as prevention of further escalation of the conflict and the reopening of the Strait of Hormuz, the Pakistani military said in a statement on Tuesday.
"The Iranian president candidly shared his government's perspective and we had a very constructive exchange on the issues involved," Interior Minister Mohsin Naqvi, who accompanied army chief Asim Munirto Tehran, said on X.
The White House and the State Department did not immediately respond to requests for comment made outside business hours. Iran has not yet commented on the latest talks with Pakistan.
Before news of the latest sanctions, Iran threatened both a possible military response and further reduction in oil exports from the Gulf in retaliation for any U.S. economic measures.
After they were unveiled, Iranian Economy Minister Ali Madanizadeh said, "We are fully prepared for the U.S. sanctions."
He told state television, "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 defense is no longer so defensive; the enemies should wait for an attack."
Neither China nor Russia had "accepted" the U.S. measures, he added, predicting that other countries would resist them.
Brigadier General Hossein Mohebbi, a spokesperson for Iran's Islamic Revolutionary Guard Corps, vowedheavy blowsto U.S. vital interests and energy chokepointsif Iran's infrastructure is threatened, Press TV reported.
LITTLE SIGN OF DIPLOMATIC SOLUTION
Struggling to resolve an unpopular war that has pushed up energy prices, the administration of President Donald Trump appears to be counting on further economic pressure, even though Iran has spent decades under layers of U.S. and international sanctions that have battered its economy but have not deterred its leadership.
Despite no major strikes by either side in weeks, the war shows little sign ofreachingadiplomatic solution.The United States is seeking new ways to end Iranian attacks on ships in the Gulf and, more recently via its allies,in the Red Sea.
Just two commodity vessels transited the key energy chokepoint of the Strait of Hormuz on Monday, for the lowest daily tally since early May, shipping data showed.
Before the conflict, the strait carried about a fifth of global flows of crude oil and liquefied natural gas.
Almost six months have passed since the U.S. and Israel launched strikes on Iran. Thousands of people have died, most of them in Iran and Lebanon.
While the war has degraded much of Iran's conventional military capacity, inflicted economic pain and killedthen-Supreme Leader Ayatollah Ali Khamenei,Iran has preserved enough missile and drone capability to attack Gulf neighbors and threaten oil tankers in the Strait of Hormuz.
The exact state of Iran's nuclear program, which the Americans and Israelis aim to wipe out, remains unknown.
Oil prices steadied on Tuesday, having fallen more than $2 a barrel a day earlier.
CHINESE OIL TRADE
Asked why he stopped short of imposing penalties on Iran and declined to identify targeted countries, Bessent responded, "Why would I want to blow up the global financial system?"
He said he wanted to give countries and companies time to sever ties.
Bessent previously urged cooperation from China, the biggest buyer of Iranian oil for several years, although the U.S. blockade of Iran's ports, renewed in mid-July, has alreadycut Iranian oil flowsto China.
Experts say Washington is wary of Chinese retaliation for any sanctions on its banks ahead of expected talks next month between Trump and Chinese President Xi Jinping, with any curbs on China's exports of critical minerals especially sensitive.
Asked about Chinese banks on Monday, Bessent said, "We want to make clear here today that no one is above the reach of U.S. sanctions."
The Chinese Foreign Ministry said sanctions and pressure tactics do not help and Beijing would do what was necessary to protect China's interests.
(Reporting by Yasmine Ghania in Cairo and David Lawder in Washington; Additional reporting by Rick Noack in Islamabad; Writing by Daniel Trotta and Lincoln Feast; Editing by Clarence Fernandez)
