Iran says it is confident it can withstand an expansion of US sanctions after Washington unveiled what it called an “economic D-Day” intended to cut the country off from the global economy.

Iranian Economy Minister Ali Madanizadeh said Tehran was “fully prepared” for the restrictions, which he predicted would result in “another defeat” for the United States.

Introducing a broad package of measures, US Treasury Secretary Scott Bessent warned that countries maintaining financial partnerships with Iran risked isolation. He added that banks and companies continuing to deal with Tehran would face similar consequences unless they severed those links.

The announcement follows policy reversals and repeated deadline extensions by the White House as it seeks to bring the conflict to an end.

Bessent called the package “the largest financial offensive ever” directed at Iran, saying it would intensify the pressure and close off every possible source of income.

However, some economists have questioned how effective the new sanctions will be, noting that their impact largely depends on how Iran’s commercial partners respond.

Among them is China, the largest purchaser of Iranian oil, which has disregarded earlier US restrictions and continued trading with Tehran.

Another major Iranian trading partner, the United Arab Emirates, announced last week that it was suspending all financial transactions with the country.

Nevertheless, only hours after Washington’s announcement, Iranian officials expressed confidence that commerce with other nations would continue.

Madanizadeh said China and Russia had rejected the US measures and forecast that additional countries would also oppose them.

“The government was prepared and remains prepared, with a two-year strategy for handling these developments,” he told state television, adding that Tehran had anticipated such plans for a long time.

“We have instruments of our own, and we understand how this game is played,” he added.

Reacting to Washington’s decision, China said it strongly opposed what it described as “unlawful unilateral sanctions”.

Foreign ministry spokesman Lin Jiang said economic coercion would not solve the underlying issues and pledged that Beijing would defend its interests.

The conflict has driven global oil prices higher. In response to the latest warning, Iran threatened to stop all oil exports from the region if the fighting continued.

Iranian authorities have also renewed warnings that vessels must not travel through the Strait of Hormuz without permission, according to reports.

About one fifth of global oil and gas supplies normally move through the strait, a narrow passage south of Iran. Flows have been effectively obstructed since the conflict started in late February, contributing to higher energy prices worldwide.

At a press conference earlier on Monday, where the initiative dubbed “Operation Economic Outcast” was outlined, Bessent said the US was beginning an “economic assault on Iran’s financial links across the world”.

“Iran now has a straightforward decision between two options: total international isolation, or a return toward normal relations and the chance to participate again in the global economy,” he said.

The Treasury secretary claimed the US was “no longer containing the Iranian threat, but bringing it to an end”.

Bessent said Treasury officials had identified the networks, intermediaries and financial routes Iran allegedly uses to bypass sanctions and sell oil.

The department said it had issued measures covering five industries: digital assets, technology, gold, aviation and shipping. It also imposed sanctions on nearly 60 organizations, people and vessels.

Warning governments and organizations that support or trade with Iran, Bessent said they could no longer pretend to be unaware that they were facilitating such activity.

He did not name individual countries, but said Trump would contact world leaders with direct requests that they end dealings with the Iranian government.

Although Bessent acknowledged that governments and businesses needed time to understand the restrictions, he warned: “They should recognize that we will act rapidly and that our intentions are serious.”

David Oxley, chief climate and commodities economist at Capital Economics, questioned whether the sanctions would achieve their stated purpose.

He said that because the renewed US naval blockade was already severely restricting Iran’s oil shipments, the immediate effect of the so-called economic D-Day on energy income could prove underwhelming.

“Our assessment is that the package will produce only a modest direct change in Iranian energy flows over the near term,” he said.

Oxley noted that roughly 90% of Iran’s oil is sold to China, which has not accepted US sanctions in the past and is unlikely to be intimidated by them now.

“China generally objects to sanctions imposed by a single country,” said Ali Vaez, deputy director of the Middle East and North Africa Program at the International Crisis Group.

He said Beijing might follow multilateral or internationally approved restrictions, but had consistently regarded sanctions imposed solely by Washington as lacking legitimacy.

Vaez added that although neighboring countries such as Pakistan, Turkey and Iraq want positive relations with the US, they cannot realistically afford to sever their connections with Iran.

He argued that economic pressure on Tehran tends not to succeed because the Iranian leadership is prepared to endure the consequences and transfer much of the hardship to the population.

During the conflict, earlier warnings included Trump’s statement in April that “an entire civilization will die tonight” unless Iran accepted an agreement to end the war and reopen the Strait of Hormuz.

The US later softened that position after Pakistan stepped in as a mediator and urged the parties to pursue further diplomatic talks.

The financial consequences of the Iran conflict are being experienced in the United States and elsewhere. Rising oil costs have intensified concerns about household expenses, with petrol and diesel considerably more expensive than a year earlier.

US gasoline prices have climbed above $4 per gallon, while affordability has become one of voters’ leading concerns ahead of November’s midterm elections.

On Monday, Brent crude, the main international benchmark for oil, was trading at $92 a barrel.

Last week, Bessent said the US government would enter the bond market and repurchase additional government debt in an effort to strengthen demand and reduce borrowing costs.

However, the market reaction proved brief, as long-term borrowing rates rose again the following day.

Iran’s government was already subject to extensive economic restrictions imposed by the United States.

Former US President Barack Obama and several American allies reached an agreement with Tehran in 2015 that removed many sanctions in exchange for limits on Iran’s nuclear activities.

Trump withdrew from the agreement in 2018, describing it as fundamentally flawed, and restored the full range of US sanctions against Iran.

During Joe Biden’s presidency, his administration made several efforts to revive the Obama-era arrangement, but no agreement was ultimately reached.

In April this year, the Trump administration introduced another round of sanctions targeting foreign banks and companies conducting business with Tehran after military action failed to force the Iranian leadership to surrender.