The United States has announced a slew of new economic sanctions against Iran and threatened countries it trades with, aiming to choke Tehran’s economy as the months-long conflict remains deadlocked. At least 60 entities across the Middle East, Asia and Europe have been targeted in the latest sanctions as part of the economic pressure campaign that could further disrupt energy markets and rattle the global economy. The US-Israel war launched on February 28 has already resulted in a spike in oil prices and disruption in global supply chains due to the blockade of the Strait of Hormuz, through which a fifth of global oil and gas previously passed.
In this explainer, we break down how secondary sanctions work, and when the US has used them in the past. The Trump administration has already been waging an economic pressure campaign against Iran under the banner of “Operation Economic Fury”, since the launch of the war in February. However, the US has recently decided to up the ante with “Operation Economic Outcast”, targeting countries that trade with Iran as well.
US Treasury Secretary Scott Bessent said on Monday that the US would target all of Iran’s sources of revenue, including oil, to prevent other countries and companies from doing business with Tehran. He said countries around the world must choose between the US and Iran, stressing that the new campaign exposes Tehran’s trade partners to secondary penalties. Bessent added that if countries and entities “facilitate transactions and are part of the ecosystem that turns Iranian oil into money, into repression, they will be targeted”, he said.
Asked why the US is threatening Iran’s business partners instead of penalising them, Bessent said: “Well, we are giving everyone the opportunity to remedy bad behaviour. Why would I want to blow up the global financial system?” Bessent’s latest statements are a follow-up to US President Donald Trump’s Truth Social post on August 19, where the president announced what he called the “most crushing economic operation” against Iran. The US has long used threats of what are known as secondary sanctions – in which countries that trade with a sanctioned country also face sanctions.
For instance, secondary sanctions are in place against the purchase of Iranian oil or heavy military equipment from Russia: countries, companies and individuals that engage in this trade are at risk of US sanctions. The US’s main leverage is access to its market and financial system. For instance, even if an Indian bank has no direct relationship with Iran, it could face secondary sanctions if it processes payments for an Indian firm trading with Tehran, especially if that bank has US branches, dollar‑clearing ties or American clients.
That risk makes institutions hyper‑cautious, avoiding anything that even touches Iran for fear of being swept up in US penalties. The threat of secondary US sanctions is also why most global banks and financial institutions no longer participate in trade with Russia or Iran – they do not want to risk losing business in the US. In 2017, Trump’s first administration authorised the Countering America’s Adversaries Through Sanctions Act (CAATSA), targeting Iran, Russia and North Korea.
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