The United States is preparing a new wave of economic restrictions against Iran, with Treasury Secretary Scott Bessent announcing last Thursday that Washington intends to inflict significant economic damage as early as this week. Bessent stated that the upcoming measures would be of a scale “never been seen in the history of economic isolation on a country.” President Donald Trump reinforced this stance on Friday, asserting that Iran would face severe economic consequences. Following the expiration of a memorandum of understanding (MoU) on Monday, Trump called on Tehran to raise the “white flag of surrender,” though he maintained he is in no rush to conclude the ongoing conflict.
Washington’s aggressive approach follows a period of intense pressure; since February 2025, the Treasury’s Office of Foreign Assets Control (OFAC) has sanctioned more than 1,000 individuals, vessels, and aircraft linked to Iran. In response, Iranian authorities have remained defiant, signaling a potential shift toward offensive military operations and confirming their readiness to repel a possible ground invasion.
Mohammad Reza Farzanegan, a professor of Middle East economics at Philipps-Universitat Marburg, noted that the current naval blockade represents a shift in strategy, combining traditional sanctions with military force to create physical shortages. Farzanegan observed that Tehran currently appears to favor continuing the armed conflict over accepting terms dictated by the Trump administration, though he warned that such a path forces Iran to choose between a negotiated exit and further economic collapse. He added that the global economy will likely suffer due to continued regional attacks and disruptions in the Strait of Hormuz.
Diplomatic efforts to resolve the war remain stalled, despite ongoing negotiations between Iran, Oman, and other mediators regarding the Strait of Hormuz. Mohammad Bagher Ghalibaf, Iran’s parliament speaker and lead negotiator, stated on Tuesday that the strait will remain closed until the US fulfills the conditions of the expired MoU. These demands include lifting the naval blockade, releasing frozen assets, ending oil sanctions, and ceasing all military threats.
To mitigate the impact of the blockade, the Iranian government has empowered border provinces to manage essential imports and has rerouted trade through land borders with Pakistan, Turkiye, Russia, and Central Asia. While a brief ceasefire in late June and early July allowed for a temporary resumption of oil exports, these flows have ceased again following the collapse of the deal. US and Israeli officials are now reportedly considering further measures to disrupt Iran’s inland imports.
The mounting external pressure has worsened Iran’s long-standing structural economic issues, including corruption and mismanagement. For the nation’s 90 million citizens, this has resulted in persistent inflation, declining purchasing power, and job insecurity. President Masoud Pezeshkian’s administration has identified market stabilization and the protection of livelihoods as top priorities for the next two years.
However, Mahdi Ghodsi, a senior economist at the Vienna Institute for International Economic Studies, expressed skepticism regarding these goals. He argued that Iran’s 15-year economic stagnation suggests that current policies are misaligned with these objectives. Ghodsi emphasized that achieving durable stability requires both a reduction in international confrontation and significant domestic political reforms to restore public trust.
Looking ahead, US media reports suggest that Washington may target independent Chinese refineries, known as “teapots,” that process Iranian crude. While the US has already imposed secondary sanctions on smaller entities in China and Hong Kong, it could escalate by designating larger Chinese banks that facilitate Iran-linked transactions. Such a move risks a direct response from Beijing, particularly as Washington remains concerned about the security of critical mineral exports.
Ghodsi noted that energy remains the primary leverage point for the US, especially following damage to Iran’s infrastructure from US and Israeli strikes. With Iran already facing electricity, gas, and water shortages, further restrictions on energy trade could force deeper rationing and industrial shutdowns. Consequently, the US is expected to tighten enforcement against entities that facilitate maritime transport, insurance, and payment routes for Iranian energy exports. The report also notes that asset freezes and attacks on ships as part of a naval blockade, Washington has announced a plan to enact a new wave of restrictions on Iran, targeting its economy, amid trade embargoes. The report also notes that it currently seems that Iran is leaning toward the second option,” he told Al Jazeera. The report also notes that namely changing the behaviour of the Iranian government, it should also “open a diplomatic exit and offer it as an option”, farzanegan said that for the US to achieve its goals. The report also notes that with tensions soaring before the war, Iran’s government delegated some authorities to border provinces to import essential goods and build up inventories. The report also notes that the blockade was lifted for several weeks in late June and early July, enabling the rapid export of oil stored on board supertankers and giving the military time to regroup, during the brief ceasefire period established under the MoU. The report also notes that the consequences include persistent inflation, insecure and poorly paid work, declining purchasing power and growing uncertainty about the future, for the country’s roughly 90 million people. The report also notes that the Islamic Republic would have to reduce confrontation with the US, the West and Israel while pursuing meaningful domestic reforms that would involve moving away from coercive social controls to restore some public trust, he told Al Jazeera that to guarantee sustainable economic growth. The report also notes that “Without both external de-escalation and domestic political reform, the government may be able to slow the deterioration in living standards and market conditions, but it is unlikely to deliver durable stability, stronger livelihoods or genuine national resilience,” Ghodsi said.
