By Kanishka Singh and Jana Choukeir
WASHINGTON/DUBAI, Aug 20 – The U.S. is set to impose "the toughest sanctions in history" on Iran, according to Treasury Secretary Scott Bessent. He mentioned that these economic measures could reduce the need for major military action against Tehran.
This announcement followed President Donald Trump’s warning about "Economic Warfare" a day earlier, where he stated there would be repercussions for any country that offered support to Iran.
As a result of these developments, oil prices climbed to a three-week high on Thursday. These threats of financial penalties aim to bring an end to a nearly six-month conflict that has left millions of barrels of Middle Eastern oil stranded.
Bessent expressed some confusion over why oil prices increased, stating to CNBC, "If we are doing the maximum economic pressure, then that means that likely there will not be a large-scale kinetic restart," referring to military actions.
IRAN CALLS US SANCTIONS 'ECONOMIC TERRORISM'
The ongoing conflict has resulted in thousands of deaths and has destabilized the region, as Gulf nations are drawn in. Iran has shown its capability to disrupt shipping through the Strait of Hormuz, a crucial waterway that historically facilitated about 20% of global oil trade.
The U.S. and Iran previously announced ceasefires in April and June, which aimed to ensure safe shipping through Hormuz, but both agreements quickly fell apart.
Before Bessent's comments, Iran's foreign ministry condemned the U.S. sanctions, labeling them as "economic terrorism" that would harm ordinary Iranians and amount to crimes against humanity.
Bessent stated that he would provide more details about the measures at a press conference on Monday. He described the strategy as a "one-two punch," highlighting the blockade on Iran and the tough sanctions being implemented.
He asserted that these actions would lead to Iran's regime collapse and urged allies and other nations to make a decision regarding their stance.
When asked whether the U.S. might target China for its business dealings with Iran, Bessent suggested some discussions are better kept private. He pointed out that China relies on 50% of its energy from the Gulf, implying that aligning with U.S. objectives could benefit them.
Data from 2025 shows that China imports over 80% of Iran’s shipped oil. However, escalating economic battles with China, a key exporter to the U.S., particularly for rare-earth minerals, could provoke retaliation against the U.S.
IRAN HAS FACED YEARS OF SANCTIONS
In a social media post, Trump promised "Economic Warfare and Isolation of an unprecedented scale," though specifics were limited. Iran has endured severe economic sanctions for nearly 50 years since the 1979 Islamic Revolution.
Trump warned that any nation supporting Iran financially would face "TREMENDOUS Economic Consequences."
Iranian Foreign Minister Abbas Araqchi accused Trump of trying to distract from domestic issues such as rising debt and interest rates, asserting that U.S. policies would only lead to further failures.
He stated, "America’s economic terrorism threatens the global economy and the sovereignty of nations worldwide."
Trump has yet to achieve his initial goals in the conflict, which include dismantling Iran's nuclear program, limiting its regional aggression, and facilitating an uprising against its clerical leadership.
Trump's threats and announcements do not always translate into actions. He did not specify actions or name any countries, although his warning seemed to extend to U.S. allies involved in peace negotiations.
Iran has also engaged in talks with Oman regarding the Strait of Hormuz and stated that an agreement could be imminent.
In response to those negotiations, Trump threatened to bomb Oman, a long-standing ally, if it obstructed U.S. efforts.
Omani Foreign Minister Badr Albusaidi, after meeting with his Japanese counterpart, emphasized that lasting peace in the strait requires comprehensive regional stability and rejected any further escalation.