The US has announced a wide range of sanctions against Iran and has threatened its allies, with Treasury Secretary Scott Bessent describing it as "the single greatest financial offensive ever."
Bessent labeled the move "an economic D-Day" for Iran, stating that the US would sever all economic ties with the country and that any nation financially partnering with Iran would also face isolation.
However, this latest threat to the Iranian regime comes after several reversals and extended deadlines from the White House in its attempts to end the conflict.
The war has caused global oil prices to surge. In response to the latest threat, Iran has warned that it would shut down all oil exports from the region if the war continued.
According to Reuters, the Iranian regime has also issued a new warning to shipping, prohibiting passage through the Strait of Hormuz without its permission.
One-fifth of the world's oil and gas typically passes through the Strait of Hormuz, a narrow waterway south of Iran. However, the flow has been effectively blocked by the country since the conflict began at the end of February, leading to higher global oil prices.
At a press conference on Monday, Bessent outlined what has been termed "Operation Economic Outcast," stating that the US was launching an "economic onslaught against Iran's financial connections around the globe."
"Iran now faces a very clear choice with only two paths before them: complete global isolation....or a path back to normalcy with an opportunity to rejoin the global economy," he said.
The treasury secretary claimed that America was "no longer managing the Iranian threat, we are ending it."
Bessent stated that the Treasury Department had identified networks, facilitators, and financial channels used by Iran to evade sanctions and trade oil.
The department announced determinations against five sectors: digital assets, technology, gold, aviation, and shipping. The Treasury has also imposed sanctions on almost 60 entities, individuals, and vessels.
Bessent said that these actions would "tighten the noose and block every potential source of revenue" for Iran's Islamic Revolutionary Guard Corps and the broader Iranian regime.
He warned governments and entities assisting or trading with Iran that they could not "claim they are blind to enabling this activity."
He declined to name specific countries but said that Trump would be contacting world leaders "with specific request to cease their interactions with the regime."
While he acknowledged the importance of giving people time to understand the new sanctions, he added: "they should know that that will move very quickly and that we are serious."
During the conflict so far, previous threats have included Trump stating in April that "a whole civilisation will die tonight" unless Iran agreed to a deal to end the war and unblock the Strait of Hormuz.
The US eventually backed down from that position after mediator Pakistan intervened and called for more diplomacy.
The economic impact of the Iran war is being felt in the US and globally. Higher oil prices have fueled concerns over the cost of living, with petrol and diesel prices significantly higher than a year ago.
In the US, gasoline prices have exceeded $4 a gallon, and affordability is a major concern for American voters ahead of the mid-term elections in November.
On Monday, a barrel of Brent crude, the global benchmark for oil prices, was $92.
Last week, Bessent announced that the US government would intervene in the bond markets and buy back more government debt in an effort to boost demand for bonds and lower borrowing rates.
However, the impact of the announcement was short-lived, with long-term borrowing costs bouncing back up a day later.
The Iranian regime already faces stringent economic sanctions from the US.
Former US president Barack Obama and several US allies had agreed to a deal with the country in 2015, which lifted many sanctions in exchange for Iran agreeing to limit its nuclear program.
However, Trump withdrew from that deal in 2018, calling it "defective at its core," and reimposed all US sanctions on Iran.
During Joe Biden's presidency, he made some attempts to reinstate the Obama-era deal, but this did not materialize.
In April of this year, the Trump administration launched a wave of sanctions on foreign banks and firms doing business with Tehran after it became apparent that its military operations had not led to the surrender of Iran's regime.
