On August 24th Scott Bessent , America’s treasury secretary, revealed the details.
Last week Mr Trump called the effort “economic D-Day”. WHEN DONALD TRUMP began Operation Epic Fury nearly six months ago, he hoped that America’s military might would crush Iran’s regime. When its bombs failed, he bet on sweeteners. In June America offered Iran sanctions relief and billions of dollars in investment in the hope the country’s leaders would open the Strait of Hormuz and renounce any nuclear ambitions. That approach failed, too. Now America is trying to break the regime by smashing Iran economically.
Iran has been under American sanctions since the Islamic revolution in 1979.
In his first term Mr Trump exerted what he called “maximum pressure” on the regime in an effort to force concessions on its nuclear programme. Mr Bessent has now announced Operation Economic Outcast, described as “an economic onslaught against Iran’s financial connections around the globe”. This is, presumably, maximum plus. As well as enforcing its blockade of Iranian oil exports, America will increase pressure on Iran’s trading partners and on institutions that help the regime move money. For now, however, the threats are more bark than bite. Countries do not have to comply with America’s demands immediately. Even so, the policy could still provoke a wider conflict.
Unemployment is 9.1%, its highest level since 2023 (unofficial estimates are much higher), according to official statistics. Inflation is running at 88% year on year. The rial has lost nearly half of its value against the dollar since the start of the year.
Iran is in dire economic straits. It hit an all-time low ahead of Mr Bessent’s announcement. The war has destroyed great chunks of Iranian industry. Damage to refineries has left fuel in short supply, leading to long queues at petrol stations. The regime is printing money to pay for food vouchers.
During the war China has been buying Iranian oil at $7-12 below the market price for a barrel, in violation of the existing American embargo. It scoops up about 90% of Iranian crude exports which, America reckons, provided the regime with nearly half its budget last year. It provided some 30% of Iran’s total imports in 2024.
On August 20th the head of Iran’s central bank said they had “fallen to zero”. A trade-intelligence firm, Iran still has some 80m barrels of oil on board ships outside the strait, according to Kpler. Mr Bessent said he wished that soldiers would lay down their arms once they stopped getting paid, leading to the collapse of the regime. China has warned that the new sanctions risk damaging global growth and financial stability, and vowed to protect its “legitimate rights and interests”. “If you start to target Chinese companies, it’s no longer an Iran issue,” argues Esfandyar Batmanghelidj of Bourse and Bazaar, a think-tank in London. “It’s a matter for your China policy.”
Meanwhile, America’s blockade of the Strait of Hormuz has caused Iran’s oil exports—the regime’s main source of income—to collapse. But that would only provide a fraction of its usual income from such exports. The Trump administration hopes that Iran’s economic woes will create an opportunity. Mr Bessent did not name the countries that he wants to reduce trade with Iran. But several stand out. The United Arab Emirates (UAE) sells more to Iran than any other country. It also hosts a network of exchange houses and shadow banks that the regime uses to evade sanctions. In April the American treasury reportedly wrote to the UAE’s leaders to ask them to clamp down on such outfits. Others, however, will be reluctant to work with America. But the administration may be reluctant to go much further for fear of retaliation or undermining Mr Trump’s diplomatic outreach to China.
America has previously targeted Chinese firms involved in Iran’s oil trade: in April it imposed sanctions on Hengli, a refiner that American officials accused of buying billions of dollars’ worth of Iranian crude.
