By Yasmine Ghania and David Lawder
CAIRO/WASHINGTON, Aug 25 (Reuters) - Iran promised to retaliate against expanded U.S. economic sanctions that the Americans said would cut off 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 those penalties would take effect, saying he would instead provide them time to comply with the new directive. The Treasury Department did announce new sanctions on 60 individuals, entities and vessels, but the list did not include any of the Chinese financial institutions suspected of facilitating Iran's oil trade.
Before the announcement, Iran threatened both a possible military response and further reduction in oil exports from the Gulf in response to any U.S. economic measures. Afterward, Iranian Economy Minister Ali Madanizadeh said, "We are fully prepared for the U.S. sanctions."
"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," Madanizadeh told state television.
He also said neither China nor Russia had "accepted" the U.S. measures, and predicted other countries would resist them.
Brigadier General Hossein Mohebbi, a spokesperson for Iran's Islamic Revolutionary Guard Corps, vowed heavy blows to U.S. vital interests and energy chokepoints if Iran's infrastructure is threatened, Press TV reported.
Struggling to resolve an unpopular war that has pushed energy prices higher, 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.
Though neither side has launched major strikes in weeks, the war shows little sign of reaching a diplomatic solution. In the meantime the U.S. is seeking new ways to end Iranian attacks on ships in the Gulf and, more recently via its allies, in the Red Sea.
Almost six months have passed since the U.S. and Israel launched strikes on Iran.
While the war has degraded much of Iran's conventional military capacity, inflicted economic pain and killed then-Supreme Leader Ayatollah Ali Khamenei, Iran has preserved enough missile and drone capability to attack its 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.
Thousands of people have died, most of them in Iran and Lebanon.
Despite Monday's announcement, oil prices fell more than $2 a barrel on Monday, though investors braced for the prospect of further supply disruptions from the Middle East.
CHINESE OIL TRADE
Asked why he stopped short of actually imposing penalties on Iran and declined to identify the countries that would be targeted, 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 already cut Iranian oil flows to China.
Experts say Washington is wary of Chinese retaliation for any sanctions on its banks ahead of expected talks next month between U.S. President Donald 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.
Amid the saber-rattling, Pakistani army chief Asim Munir visited Iranian President Masoud Pezeshkian in Tehran on Monday in a peace mission that came after Munir spoke with Trump last week, according to three Pakistani sources. Trump initiated the conversation, two sources said.
"The United States must correct its tone and approach in interacting with Iran, because relying on coercion and bullying will only complicate the processes," Iranian state media quoted Pezshkian as telling Munir.
Pakistan's earlier mediation efforts between the U.S. and Iran resulted in an interim peace agreement signed in June, but the Islamabad Memorandum quickly faltered.
(Reporting by Yasmine Ghania in Cairo and David Lawder in Washington; Writing by Daniel Trotta; Editing by Lincoln Feast.)
