Iran Denounces Widened US Sanctions, Threatens Retaliation Over Oil Trade
US Sanctions and Rising Tensions in the Middle East
By Yasmine Ghania and David Lawder
Iran's Response to Expanded US Sanctions
CAIRO/WASHINGTON, Aug 25 (Reuters) - Iran denounced on Tuesday expanded U.S. sanctions aimed at isolating its economy as an act of "gross lawlessness", expressing confidence that many countries would not join the pressure campaign.
Almost six months into a conflict the U.S. has struggled to resolve, Treasury Secretary Scott Bessent unveiled the measures on Monday but stopped short of the most punishing options.
While he said countries that continued trading with Iran risked being forced out of the dollar-based financial system, he declined to give a timeline or identify which may be targeted, saying he would give them time to comply with the new directive.
Potential Mediation and Strait of Hormuz Security
There have been signals of a potential return to mediation to end the war, which began with U.S. and Israeli strikes on Iran and has shut down most shipping in the Strait of Hormuz, previously a conduit for about a fifth of global oil and liquefied natural gas shipments.
Iran and Oman said they had discussed a proposal on Tuesday for a "joint temporary navigational corridor" through the strait and a plan to clear the strait of mines.
U.S. President Donald Trump repeated earlier assertions that all mines in the strait had been removed or detonated, adding that Iran had been told that any ship or boat placing new mines would be destroyed.
Iran Vows Retaliation and International Response
Iran's Stance on Sovereignty and Law
IRAN VOWS RETALIATION IF INFRASTRUCTURE THREATENED
Iran's Foreign Ministry described the latest U.S. sanctions as a threat to international law and the U.N. charter, saying in a statement that "the issue is no longer limited to Iran".
"No honorable state that values its sovereignty and national interests will accept the normalization of such gross lawlessness and systematic bullying," it said.
Sanctions Impact on China and Russia
The Treasury Department announced new 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.
China has been the biggest buyer of Iranian oil for several years. However, the U.S. blockade of Iran's ports has cut those oil flows to China since Washington resumed it in mid-July.
Trump has said he expects to host Chinese President Xi Jinping next month, and the U.S. is keen to avoid any curbs on China's exports of critical minerals.
China said on Tuesday that its cooperation with Iran was conducted within the framework of international law and should not be interfered with.
Iranian Economy Minister Ali Madanizadeh said neither China nor Russia had "accepted" the U.S. measures, predicting that other countries would resist them.
Military Threats and Oil Market Reaction
There have been no major U.S. or Iranian strikes for weeks, but a spokesperson for Iran's Revolutionary Guards vowed heavy blows to U.S. interests and energy chokepoints if Iran's infrastructure is threatened.
Oil prices fell for a second day as traders brushed off the impact of the sanctions, although market participants remained wary of Iran's continued ability to disrupt shipping.
Escalation in the Strait of Hormuz
Oil Tanker Incident
OIL TANKER STRUCK NEAR STRAIT OF HORMUZ
An oil tanker was struck on Tuesday by an unidentified projectile and disabled about 9 nautical miles (17 km) northeast of Oman's Ash Shishah, which lies at the entrance to the Strait of Hormuz, the United Kingdom Maritime Trade Operations said.
Peace Talks and Mediation Efforts
Tehran and Washington signed an interim deal in June aimed at ending the war, but it quickly frayed and Iran resumed ship attacks that have strangled energy exports from the Gulf.
Mediator Pakistan made "significant progress" in the latest talks with Tehran, which focused on preventing further escalation and reopening the Strait of Hormuz, the Pakistani military said.
Abbas Golroo, head of the foreign relations committee in the Iranian parliament, said Pakistan's army chief Asim Munir had delivered a message from the U.S. to Iran on Monday.
"It seems the main goal was to revive the stopped political process," he told ISNA news agency. There was no immediate comment from the White House or the State Department.
Iran expressed a general willingness to resume peace talks during meetings between Iranian and Pakistani officials on Monday, while expressing concern about the sanctions, a Pakistani government source said.
"Pakistan told them the U.S. will reverse those decisions either before, or during a new round of negotiations," the official said.
US Diplomatic Moves and Conflict Impact
Return to Diplomatic Missions
U.S. BEGINS SENDING PERSONNEL BACK TO DIPLOMATIC MISSIONS
The U.S. is beginning to send personnel back to some diplomatic missions in the Middle East that were evacuated or downsized amid tensions with Iran, two people familiar with the matter told Reuters.
The move suggests Washington sees a lower risk of the conflict with Iran escalating in the near term, though some embassies will initially operate below full capacity.
Public Opinion and Human Cost
U.S. public approval of the war fell to its lowest level since the conflict's early days, with Trump's popularity at a record low ahead of congressional elections in November, a Reuters/Ipsos poll that closed on Monday showed.
Thousands of people have died in the conflict, most of them in Iran and Lebanon, while much of Iran's conventional military capacity has been degraded. The exact state of its nuclear program, which the U.S. and Israel aim to wipe out, remains unknown.
Additional Reporting
(Additional reporting by Rick Noack and Mubasher Bukhari in Islamabad, Yasmine Menna Alaa El Din and Nafisa Eltahir in Cairo; Writing by Philippa Fletcher and Aidan Lewis; Editing by Clarence Fernandez, Sharon Singleton and Gareth Jones)
