US Vows To Impose Toughest Sanctions In History On Iran
US Treasury chief Scott Bessent said Washington would impose tougher Iran sanctions, potentially reducing the need for major military operations.
- Oil prices rose to a more than three-week high.
- The increase followed US threats of tougher sanctions against Iran.
- Treasury Secretary Scott Bessent called them the “toughest sanctions in history”.
- Washington says economic pressure could reduce the need for major military action.
- The US may impose secondary sanctions on countries and companies trading with Iran.
- The Strait of Hormuz carried about one-fifth of globally traded oil before the conflict.
- Shipping through the waterway has slowed because of security uncertainty.
- Washington says Hormuz is open, while Iran says it remains closed.
- Earlier ceasefire agreements in April and June quickly collapsed.
- Higher oil prices could raise transport, fuel, food, and shipping costs.
- Markets will remain focused on diplomacy and the future of the Strait. Oil Prices Rise as US Plans Tougher Iran Sanctions
Oil prices climbed to a more than three-week high on Thursday as investors assessed the impact of new US economic threats against Iran and the continuing uncertainty around the Strait of Hormuz.
Washington says the measures are intended to pressure Iran to end the nearly six-month-old conflict without the need for another large-scale military operation.
The announcement unsettled energy markets because millions of barrels of Middle Eastern oil have been stranded by the war and restrictions around the Strait of Hormuz. Brent crude rose to around $91.87 a barrel in early trading, while US West Texas Intermediate remained near $85.81. Oil prices had already reached their highest level in more than three weeks after Iran said the Strait would remain closed.
Bessent said he was unsure why oil prices had risen after the announcement. He argued that maximum economic pressure could reduce the likelihood of a major military escalation.
“If we are doing the maximum economic pressure, then that means that likely there will not be a large-scale kinetic restart,” he said, using the term “kinetic” to refer to direct military action.
He later said the new package would be explained in greater detail at a press conference on Monday. Bessent described the strategy as a “one-two punch”: the existing blockade on Iran, followed by the toughest sanctions ever imposed by the United States.
The proposed measures could target Iran’s oil industry, financial networks, shipping companies, and businesses that continue to trade with Tehran. Washington is also considering penalties against foreign companies and countries that help Iran bypass restrictions. Such secondary sanctions could place pressure on governments and firms that maintain commercial relations with Tehran.
For ordinary people, however, sanctions and war are often felt through prices. Higher crude prices can raise the cost of petrol, diesel, transport, food distribution, air travel, and household goods. If shipping insurance becomes more expensive or vessels avoid the Gulf, consumers far from the conflict may still feel its consequences.
Before the conflict began, approximately one-fifth of globally traded oil moved through the waterway. The narrow passage links the Persian Gulf with the Gulf of Oman and is difficult to replace quickly through alternative routes.
Shipping through the Strait has slowed sharply as vessel operators wait for clearer information about the blockade and the conditions for reopening. The United States says the waterway is open, while Iran maintains that it remains closed until an agreement is reached.
The conflicting claims have created uncertainty for shipowners, energy companies, and governments that depend on reliable oil supplies. Even when vessels are technically able to pass, companies may avoid the route if they fear attacks, seizures, mines, or sudden military action.
Ceasefires fail to hold
The conflict has killed thousands and drawn several Gulf countries into a widening regional crisis. The United States and Iran announced ceasefire agreements in April and June, both of which were intended to restore shipping through Hormuz and create a path towards ending the war.
Neither arrangement lasted. The repeated breakdown of ceasefires has made markets more sensitive to every military statement and diplomatic signal. Investors are now watching for evidence that the latest sanctions will encourage negotiations or instead trigger a fresh escalation.
Iran’s Foreign Ministry condemned the proposed measures as “economic terrorism”. It said sanctions would not weaken the country’s determination to protect its independence, dignity, and national sovereignty.
The competing positions leave diplomacy in a fragile state. Washington is threatening deeper economic isolation, while Tehran is presenting resistance as a matter of national pride. Until the Strait is safely reopened and a durable political agreement is reached, oil markets are likely to remain volatile.