The European Union has formally thrown its weight behind Washington’s campaign to sever Iran from the global financial system, a move Treasury Secretary Scott Bessent hailed as a decisive step in what he called an “economic onslaught” against Tehran. The endorsement, announced by Brussels on Aug. 31, aligns the 27-member bloc with the Trump administration’s “Operation Economic Outcast,” launched in late August to target Iran’s access to digital assets, advanced technology, gold reserves, commercial aviation, and shipping.

“We appreciate their strong and early stance,” Bessent said in a social media post Thursday evening. “The world is sending a clear message to the Iranian regime: We will not stop until every remaining financial lifeline has been severed.” He added that the United States “stands firm with our allies in ensuring the murderous Iranian regime cannot exploit the global financial system to fund its nuclear ambitions, weapons programs, and terror proxies.”

The EU’s decision came as G20 finance ministers and central bank governors gathered in Asheville, North Carolina, earlier this week. Ahead of the summit, Bessent had signaled he would press counterparts to cut financial ties with Tehran or face secondary sanctions, warning that countries aiding Iran should “expect to share in the isolation of a withering regime.”

Tehran’s Response and Escalating Military Front

Iran’s foreign ministry spokesperson, Esmail Baghaei, denounced the EU’s endorsement of what he described as Washington’s “economic terrorism.” In a post on Sept. 1, he accused the bloc of having “surrendered its sovereignty, its laws and regulations, values and ethics to U.S. coercion.”

The financial campaign is unfolding alongside an intensifying military confrontation. The U.S. military carried out a new wave of strikes earlier this week against military targets inside Iran, retaliation for attacks on commercial shipping and American forces in the region. Tehran responded with missile strikes on U.S. bases across the Middle East.

Shipping through the Strait of Hormuz, the chokepoint that historically carried roughly a fifth of global oil flows, remains subdued. Iran has periodically struck vessels using the southern shipping lane near the Omani coast, while the U.S. Navy maintains a blockade aimed at preventing any ships from entering or leaving Iranian ports.

U.S. Central Command said Friday that American forces had redirected 87 commercial vessels, disabled three, and boarded two to enforce compliance with the blockade. The operation is designed to choke off Iran’s crude oil exports, its most critical source of foreign currency.

Economic Pressure Mounts Inside Iran

The cumulative weight of sanctions, blockades, and secondary penalties is producing visible strain inside Iran, according to three senior Iranian officials who spoke to Reuters. They described a regime far more vulnerable than at any point in decades of sanctions evasion, with few remaining channels to secure foreign exchange or purchase essential goods.

Data from commodity analytics firm Kpler shows Iranian crude loadings have collapsed to roughly 260,000 barrels per day, down from about 1.7 million barrels a day a year earlier. The dramatic decline reflects both the naval blockade and the escalating cost of maintaining the shadow networks of front companies, unregistered tankers, and smuggling routes that Tehran has long relied upon.

The United Arab Emirates added to the pressure on Aug. 19 by suspending all commercial and financial dealings with Iran, eliminating a key trade and financing corridor. Bessent, in a Fox News interview Wednesday, pointed to recent sanctions against the Dubai branches of an Egyptian bank that he said had funneled more than $1.8 billion to the Iranian regime since 2025.

“We are telling friends and foes, do not deal with this evil regime,” he said. “We know who you are, you know who you are, and if we have to, we will put you out of business.”

The domestic consequences are stark. Iran’s currency, the rial, has plunged to a record low, trading at more than 2.2 million per U.S. dollar compared with roughly 1 million a year ago. Official data show average inflation over the past 12 months reached 69.9%, with food, beverage, and tobacco prices rising at nearly double that rate. Unemployment has climbed to 9.1%, with employment down by about 450,000 people from a year earlier. The average monthly wage of roughly $125 falls far short of the estimated $450 needed to cover basic household expenses.

A senior official said Iran’s gasoline stockpiles would last only about two more months. Despite being a major oil producer, Iran’s limited refining capacity forces it to import fuel, a vulnerability the sanctions have exacerbated. Bessent cited hourslong queues at petrol stations and an inability to pay military personnel as evidence the campaign is working.

Strategic Calculations on Both Sides

Ali Ansari, a professor of modern history at the University of St Andrews, said the pressure is unprecedented. “They are under very, very heavy economic pressure, and they are also losing control of the strait,” he said. “The real question is whether they will choose to negotiate, and I think they will ultimately have to.”

The confrontation has entered a phase where both sides are attempting to transmit pressure into the other’s domestic politics. A senior Iranian official said Tehran hopes high oil prices and inflation will force the Trump administration to relent before November’s U.S. midterm elections. Washington, by contrast, is betting that economic deterioration will spur popular unrest against the regime.

Bessent framed the strategy as a multi-layered campaign. “We had these six weeks of successful kinetic strikes, then we have imposed the blockade, which is quarantining and isolating the country,” he said. “Now we are applying sanctions like have never been seen before that are going to asphyxiate the regime.”

China remains a wildcard. Before the war, Beijing was Iran’s largest trading partner, purchasing around 90% of its sanctioned crude exports. The Trump administration’s weekly cadence of new secondary sanctions, with an initial focus on the banking system, is designed to make such transactions prohibitively costly by cutting facilitating institutions off from the dollar-based financial system entirely.

The EU, while joining the U.S.-led operation, has maintained its own separate sanctions regime targeting Iran’s nuclear and ballistic missile programs and its military support for Russia. The bloc’s endorsement of Operation Economic Outcast represents a significant escalation, signaling that Washington’s economic isolation strategy now enjoys broad Western backing.