US Signals Toughest-Ever Iran Sanctions as Trump Threatens Countries Supporting Tehran and Oil Markets Brace for Further Disruption

The United States is preparing to impose what Treasury Secretary Scott Bessent described as the “toughest sanctions in history” on Iran, intensifying Washington’s economic campaign against Tehran as the administration signals that financial pressure could reduce the need for another major military offensive.

Bessent’s remarks on Thursday, August 20, came a day after President Donald Trump threatened an unprecedented campaign of “Economic Warfare and Isolation” against Iran and warned countries, companies and financial institutions that provide Tehran with what he called “any type of lifeline” that they could face severe economic consequences.

The threats have added fresh uncertainty to global energy markets. Oil prices climbed to more than a three-week high on Thursday as traders assessed the possibility that the confrontation could further disrupt Middle Eastern energy supplies and shipping through the Strait of Hormuz, one of the world’s most strategically important oil routes.

Speaking to CNBC, Bessent suggested that the administration’s emphasis on maximum economic pressure could make a large-scale military operation against Iran less likely.

“I’m not sure why oil has popped up on this,” Bessent said. “If we are doing the maximum economic pressure, then that means that likely there will not be a large-scale kinetic restart.”

His reference to a “kinetic” restart was understood as a reference to renewed major military action.

Bessent said the United States would provide more details about its planned measures during a press conference on Monday.

“It is a one-two punch,” he said, referring to the US naval blockade imposed on Iran in April and subsequently paused for a month in mid-June. “We have the blockade, and we are going to have the toughest sanctions in history.”

He went further, saying the measures were intended to exert sufficient pressure to destabilize Iran’s leadership.

“It is going to work in Iran and we are going to collapse this regime. It is time for our allies and the rest of the world to make a decision,” Bessent said.

The comments represent a significant escalation in Washington’s economic campaign against Tehran. While the United States has imposed extensive sanctions on Iran for decades, the Trump administration is now threatening to expand the pressure beyond Iranian entities and directly target foreign companies, banks and governments that continue economic relations with Tehran.

Trump’s warning on Wednesday was deliberately broad.

“ANY country that allows its financial institutions, businesses, airports, or government entities to provide any type of lifeline to Iran will itself face TREMENDOUS Economic Consequences,” Trump wrote in a social media post.

However, the president did not specify what measures would be imposed or identify countries that could be targeted.

That uncertainty has left governments and businesses assessing whether existing commercial relationships with Iran could expose them to American penalties.

One of the most consequential questions concerns China, Iran’s most important oil customer and a major economic partner.

Asked whether Washington could target Chinese entities for continuing to conduct business with Iran, Bessent declined to provide details, saying that some discussions were better conducted privately.

“Keep in mind that the Chinese get 50 per cent (of their) energy from inside from the Gulf. So it would do them a great service to get with the programme,” he said.

China buys more than 80 percent of Iran’s shipped oil, according to 2025 data from analytics firm Kpler. That makes Chinese demand critical to Tehran’s ability to continue earning export revenue despite decades of US sanctions.

At the same time, targeting China with additional economic penalties would carry substantial risks for Washington.

China is a major exporter to the United States and plays an important role in global supply chains, including the supply of rare-earth minerals and other strategic materials. Any new sanctions targeting Chinese companies or financial institutions could therefore provoke retaliation against American interests.

The possibility of another confrontation between Washington and Beijing also complicates the Trump administration’s effort to pressure Tehran while maintaining broader economic and strategic relationships with China.

Iran has rejected the US threats, accusing Washington of pursuing policies that would primarily hurt ordinary Iranians rather than the country’s leadership.

Iran’s Foreign Ministry condemned the proposed economic and trade sanctions as “economic terrorism,” arguing that they would target civilians and could amount to crimes against humanity.

Foreign Minister Abbas Araqchi also criticized Trump’s statements, accusing the US president of attempting to divert attention from economic difficulties inside the United States, including high government debt and rising interest rates.

Araqchi said Washington’s continued reliance on what he described as failed policies would produce further failures and deepen hostility toward the United States.

“America’s economic terrorism threatens the global economy and the national sovereignty of countries around the world,” Araqchi said in a post on X.

Iran has lived under extensive US sanctions for much of the period since the 1979 Islamic Revolution. Washington has repeatedly used restrictions on Iranian oil exports, banking, shipping, financial transactions and other sectors in attempts to constrain Tehran’s economy and foreign policy.

Despite those measures, Iran has developed mechanisms for continuing to trade with selected partners, particularly China, and has maintained significant oil exports.

The latest US campaign therefore faces the challenge of tightening an already extensive sanctions regime without creating new avenues for evasion or provoking wider economic disruption.

The economic confrontation is unfolding against the backdrop of a nearly six-month-old war that has killed thousands of people, drawn Gulf countries into the conflict and disrupted global energy markets.

The Strait of Hormuz has emerged as one of the most important pressure points.

Before the conflict began in February, roughly one-fifth of the world’s traded oil moved through the narrow waterway between Iran and Oman. Any prolonged disruption to shipping through the strait therefore has the potential to affect oil prices, transportation costs and inflation well beyond the Middle East.

Iran has demonstrated its ability to restrict shipping through the waterway, increasing concerns among energy importers and international shipping companies.

The United States and Iran have twice announced ceasefire arrangements, in April and June, with the agreements intended to restore freedom of navigation through Hormuz and create a pathway toward ending the wider conflict.

Both ceasefires, however, quickly collapsed.

The resulting uncertainty has left energy markets highly sensitive to statements from Washington and Tehran.

Oil prices rose on Thursday following Trump’s threats, reflecting concerns that the latest escalation could once again affect the supply and movement of crude oil from the Gulf.

Bessent’s suggestion that maximum economic pressure could reduce the likelihood of renewed large-scale US military operations may have helped limit some of those concerns, but the prospect of additional sanctions remains a significant risk for the global economy.

The administration’s economic escalation also comes as Trump has yet to achieve the central objectives he outlined at the beginning of the war.

Those objectives included dismantling Iran’s nuclear programme, reducing its capacity to attack regional rivals and creating conditions that could lead Iranians to overthrow the country’s clerical leadership.

The continued existence of Iran’s government and its ability to maintain economic relationships with countries including China demonstrate the difficulty of achieving those objectives through pressure alone.

Trump’s use of social media to announce or threaten major policy actions has also created uncertainty because not every threat or proposal is ultimately implemented exactly as announced.

His latest warning similarly offered few concrete details about the sanctions regime.

The administration has yet to explain precisely which Iranian sectors will face additional restrictions, which foreign entities could be punished, or whether Washington intends to impose secondary sanctions on countries that continue importing Iranian oil.

Those details will be closely watched by governments, banks, energy companies and traders.

The latest US-Iran confrontation also threatens diplomatic efforts involving Oman, a longstanding intermediary between Washington and Tehran.

Iran has been separately negotiating with Oman over arrangements for managing the Strait of Hormuz and has said in recent weeks that an agreement was close.

Trump reacted to those negotiations on Monday with a warning that he could bomb the Gulf state if it “gets in the way.”

Oman has traditionally maintained close relations with both the United States and Iran and has frequently played a role in facilitating diplomatic contacts between the two sides.

Omani Foreign Minister Badr Albusaidi, speaking after meeting his Japanese counterpart on Thursday, called for a long-term diplomatic solution.

He said lasting security in the Strait of Hormuz required permanent peace in the region and rejected further escalation.

His comments underscore the difficult diplomatic environment surrounding the crisis. Gulf states have a strong interest in keeping the Strait of Hormuz open, while also seeking to avoid becoming direct participants in the conflict between Washington and Tehran.

The US campaign now faces a complicated balancing act.

Washington wants to cut Iran’s access to international finance and oil revenues while avoiding a new military confrontation that could further destabilize the Middle East and disrupt global energy supplies.

For Iran, the challenge is equally severe. The country must maintain oil exports and access to foreign currency while dealing with increasingly aggressive US restrictions.

For China and other countries trading with Tehran, the issue is whether continued commercial ties are worth the risk of American sanctions.

The potential consequences extend beyond Iran. If Washington succeeds in significantly reducing Iranian oil exports, global crude supplies could tighten and prices could rise. If sanctions trigger retaliation by China or other major economies, the dispute could also develop into a broader economic confrontation.

Bessent’s promise of the “toughest sanctions in history” therefore represents more than another round of restrictions on Iran. It signals a potentially wider campaign designed to force countries around the world to choose between maintaining economic ties with Tehran and avoiding punitive action from Washington.