Key Takeaways:
The US Treasury chief said Iran is "lashing out kinetically because they are losing economically" as Washington's sanctions campaign enters its most aggressive phase.
US Treasury Secretary Scott Bessent said Iran's economy could collapse within weeks or months as Washington escalates its sanctions campaign, targeting five sectors and 60 entities in the latest round of "Operation Economic Outcast."
"We just have to have the regime come to their senses," Bessent told reporters Monday on the sidelines of the G20 finance ministers meeting in Asheville, North Carolina. He said Iran is "lashing out kinetically because they are losing economically," pointing to Tehran's missile strikes on US military sites in Jordan as evidence the pressure is working.
The escalation is already rippling through markets. Gold fell 0.8 percent to $4,419.38 per ounce, a two-week low, while the Nasdaq dropped 0.4 percent, the S&P 500 slipped 0.5 percent, and the Dow Jones Industrial Average lost 0.6 percent. Energy prices jumped 14.7 percent year-over-year in July, with petrol up 24.6 percent, as the Strait of Hormuz — which handles roughly 21 percent of global oil trade — has seen daily ship traffic fall from about 100 vessels to an average of seven since the war began in February.
The stakes extend beyond Tehran. Bessent said the US would likely unveil new sanctions weekly, starting with banks, and warned that any institution handling Iranian money faces being cut off from the dollar-based financial system. The Treasury already proposed blocking Banque Misr's UAE branches from US financial institutions over an estimated $1.8 billion in transactions linked to Iranian shadow banking networks between January 2024 and June 2026.
The new wave, announced last week, targeted aviation, digital assets, gold, technology, and shipping, along with 60 individuals and vessels. The European Commission said it welcomes "additional economic pressure, including through the US-led Operation Economic Outcast," while the UAE — a key hub for trade with Iran — has halted all trade and financial transactions with Tehran.
Iran's Central Bank Governor Abdolnaser Hemmati rejected Bessent's assessment, calling the collapse claim "incorrect." "I say to the American president that we have enough foreign currency," he told a news conference. Iran's Foreign Ministry labeled the sanctions "systemic bullying" that violates international law.
The escalation follows the collapse of a 60-day US-Iran memorandum of understanding signed in June, which fell apart over disagreements about control of the Strait of Hormuz. Since then, Washington has shifted from sustained military strikes to economic pressure — a pivot that came as US media reported the military was running low on Patriot interceptor missiles. The last time Washington pursued sanctions of comparable scope was the 2018 "maximum pressure" campaign, which preceded a sharp contraction in Iranian oil exports within a year.
Bessent's Iran comments came as the Trump administration faced resistance at the G20 over its broader trade agenda. Failed talks with Canada have raised the prospect of 50 percent tariffs on Canadian goods, with Prime Minister Mark Carney threatening retaliatory measures. Michigan Governor Gretchen Whitmer warned the tariffs would raise costs for residents and could trigger job cuts in the state's auto sector.
The trade friction compounds the energy-driven inflation pressure. Fed Chairman Kevin Warsh, in his first international policy meeting since taking office in May, said inflation remains too high and financial conditions are not restrictive enough, pointing to a potential rate hike. WTI crude traded at $80.16 per barrel while Brent stood at $85.86.
Trump's approval rating has fallen to 33 percent as higher petrol prices and the prolonged war create growing domestic pressure. With midterm elections in November, analysts say the administration faces a narrowing window to resolve the conflict. Trita Parsi of the Quincy Institute said the strategy of periodic strikes amounts to "permanent warfare to manage the problem," warning that "an utter defeat from the US's starting point of thinking the war would take no more than four days."
This article is for informational purposes only and does not constitute investment advice.
