The United States is set to intensify economic pressure on Iran next week through measures Treasury Secretary Scott Bessent described as unprecedented in the history of economic isolation. The announcement comes as ceasefire negotiations have stalled and tensions surrounding the strategically vital Strait of Hormuz continue to escalate. Defense Secretary Pete Hegseth stated on Thursday that the U.S. military possesses the capability to maintain a naval blockade of Iran indefinitely, rotating ships in and out of the region as needed.
He emphasized that the blockade, which has already inflicted severe economic damage on Iran, can be sustained for as long as necessary. Bessent declared during an interview on Newsmax's "Rob Schmitt Tonight" program that additional financial measures would be announced in the coming week, stating "we are going to apply measures like have never been seen in the history of economic isolation on a country." The Treasury Secretary did not provide specific details about the nature of these measures. The escalating tensions reflect the breakdown of a tentative ceasefire agreement reached in June.
With peace negotiations failing to resolve the underlying conflict, Iran has sought to leverage its control over the Strait of Hormuz, attacking vessels attempting to transit the waterway. The strategic passage handles approximately one-fifth of the world's oil and liquefied natural gas trade. Shipping traffic through the strait has declined significantly, dropping to eight vessels on Tuesday compared to a 10-day average of approximately 12 vessels and pre-war levels of 130 to 140 ships.
Two vessels from the state-owned Abu Dhabi National Oil Company were attacked while transiting the strait on Thursday evening, with the UAE government condemning the incident as an Iranian attack. President Trump faces mounting domestic pressure to resolve the conflict, as high fuel prices have negatively impacted his approval ratings and threaten his party's control of Congress ahead of November midterm elections. Trump has repeatedly asserted that the U.S. maintains "total control" over the strait, a claim Iran has denied.
Tehran has indicated it will not allow the waterway to reopen until its conditions are met, including the removal of economic sanctions and the release of frozen Iranian assets. The U.S. initially lifted its blockade of Iranian shipping and ports for one month in mid-June but subsequently reimposed it, cutting off Tehran's primary source of hard currency and compounding earlier losses from military strikes on Iran's energy infrastructure. Washington has stated it would lift the Iranian blockade once Iran and Oman reach an agreement to restore commercial shipping.
The geopolitical situation is exacerbating global energy concerns. The International Energy Agency projected on Wednesday that global oil supply would fall by 4.3 million barrels per day, approximately 4% this year, revising upward from its previous forecast of a 3.7 million barrel per day decline made just one month earlier. Oil prices settled down more than 2% on Thursday following a week of gains as investors focused on signs of weaker global demand and increased U.S. crude inventories.
However, reports of Yemen's Iran-backed Houthis targeting a Saudi Aramco refinery with drones renewed concerns about a wider regional conflict. Global economists have warned of a sharp decline in global growth resulting from the conflict, with some regions potentially entering recession. These economic risks are expected to intensify if the war continues unresolved.
When questioned about whether declaring a ceasefire in April had been a strategic error, Hegseth declined to comment, stating instead that "We're doing exactly what we need to, to ensure that Iran never has a nuclear weapon." Source: The Economic Times / Reuters
Source: m.economictimes.com