US Secondary Sanctions Hit Singapore, China, and Hong Kong with September 8 Deadline

The US Department of the Treasury has imposed secondary sanctions on companies and individuals in Singapore, China, and Hong Kong for dealing with Iran, in a sharp escalation extending for the first time to Beijing's largest trading partners in the region.

Washington set September 8 as the deadline to wind down existing contracts with the Iranian side, giving affected companies just two weeks to rearrange their commercial relations and avoid sanctions.

Risk levels surged in oil markets following a Houthi missile strike targeting a giant Saudi tanker in the Red Sea and the breakdown of another tanker near Oman, bringing the scenario of closing the Strait of Hormuz back to the forefront.

Analysts believe that closing Hormuz would immediately push Brent crude prices up by more than $20 per barrel, as nearly 20% of global daily oil supplies pass through the strait. If tension escalates, global energy markets will enter a zone of the highest level of uncertainty since the 1973 oil shock.

What Do These Terms Mean?

Secondary Sanctions: Sanctions imposed by a country on a third party that did not directly violate its laws, but dealt with a sanctioned entity. Such as fining a Chinese bank for conducting transactions with an Iranian company.

Wind-Down Deadline: A timeframe granted by the US government to foreign companies to terminate their contracts with the Iranian side before full sanctions take effect against them.

Strait of Hormuz: A narrow maritime passage between Iran and Oman, through which nearly 20 million barrels of oil pass daily, and closing it means an immediate halt to one-fifth of global oil supplies.