Washington is betting that tougher sanctions, financial restrictions and pressure on Iran’s oil trade can force Tehran to compromise. Iran, meanwhile, is using the Strait of Hormuz to show that economic pressure can hurt its adversaries too.
The Iran war is increasingly being fought beyond the battlefield. Its new front is Iran’s economy, as Washington relies more heavily on sanctions, oil restrictions, financial pressure and a naval blockade to force Tehran to yield. The question now is whether Iran will buckle under the pressure or whether the economic costs will increasingly spread to the US and its allies.
Months into the conflict, the Trump administration is shifting greater weight onto sanctions, oil restrictions, financial pressure and the naval blockade of Iranian ports. The strategy is designed to deprive Tehran of the revenue and international economic access it needs to sustain itself and, ultimately, push it towards concessions.
Recently, US Treasury Secretary Scott Bessent has indicated that Washington is preparing economic measures against Iran that it considers more severe than previous sanctions campaigns. Reuters reported that Bessent said the United States was preparing unprecedented measures, while the administration continues to use the blockade of Iranian ports as part of its pressure campaign.
That makes the economic strategy more than another round of sanctions. Washington is trying to combine financial isolation with pressure on the physical movement of Iran’s oil and other goods, effectively targeting the channels through which Tehran earns money and conducts international trade.
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The next phase could reach beyond Iranian companies and individuals.
Reuters reported that Washington is considering secondary sanctions against Chinese independent refineries, known as “teapots”, that purchase Iranian crude. Chinese banks involved in processing Iranian oil revenues could also come under pressure.
That would be significant because China remains the main destination for Iran’s oil exports. Reuters, citing Kpler data, reported that China bought more than 80% of Iran’s shipped oil in 2025, with independent Chinese refineries accounting for much of that trade.
The objective would therefore be to make Iran’s economic network harder to operate even when transactions involve companies outside Iran.
The United States has already targeted tankers, insurers and other parts of the maritime trade associated with Iranian oil. Reuters reported in July that Washington imposed additional Iran-related sanctions on insurers and tankers, further tightening the net around Tehran’s oil trade.
But targeting Chinese businesses carries a different level of risk. Secondary sanctions could put Washington into a direct economic confrontation with Beijing and potentially disrupt an important source of crude for Chinese refiners.
Iran is under pressure but can push back
There is little doubt that the economic pressure is hurting Iran. The combination of sanctions, disrupted oil exports and the naval blockade has made it significantly harder for Tehran to earn and move foreign currency.
Yet economic pain does not necessarily produce political concessions.
Iran has spent years developing ways to operate under sanctions including alternative trading arrangements, informal financial channels and networks designed to keep oil moving despite restrictions. That history is important because Washington is attempting something that has been tried before: using economic hardship to force Tehran to change strategic behaviour.
The Trump administration is betting that the pressure will eventually become too costly for Iran to absorb. But analysts have warned that sanctions can take time to produce political results and may not by themselves deliver the concessions Washington wants. The Associated Press reported that the administration’s renewed sanctions strategy faces questions over whether economic pressure can produce a quick breakthrough after decades of mixed results.
That creates the central uncertainty of the current conflict: how much economic pain can Iran withstand and how much economic disruption can the US and its partners tolerate?
Hormuz turns economic pressure into a global problem
The Strait of Hormuz makes that calculation considerably more complicated.
For Washington, reopening the waterway has become increasingly important because normal shipping is essential to restoring global energy flows. For Tehran, restricting traffic through the strait provides one of its most powerful ways of imposing costs beyond its borders.
According to recent reports, commercial traffic through Hormuz had fallen sharply following attacks on vessels and renewed US threats of greater economic pressure. That means the economic battle is no longer confined to Iran.
A prolonged disruption could raise oil and shipping costs, affect insurance markets and add pressure to economies that depend on Gulf energy supplies. It could also create political pressure on Washington if higher fuel prices begin to affect American consumers. This is the paradox at the centre of the strategy.
The US wants economic pressure to make Iran pay for keeping Hormuz restricted. But the longer Hormuz remains disrupted, the greater the possibility that Iran’s economic weapon will also impose costs on the US and the wider global economy.
Who blinks first?
The confrontation is therefore becoming a test of competing calculations.
Washington believes Iran’s dependence on oil revenue, foreign trade and access to international finance gives the United States considerable leverage. Tehran, meanwhile is betting that it can absorb economic hardship while using the Strait of Hormuz and regional disruption to raise the costs of continued US pressure.
The US can tighten sanctions further, target foreign companies dealing with Iran and restrict the movement of Iranian oil. But every escalation carries the possibility of retaliation, particularly through shipping and energy markets.
That is why the economic front could prove more complicated than the military one.
The battlefield has a relatively clear measure of success: territory destroyed, weapons eliminated or attacks repelled. Economic warfare is harder to measure. A currency can weaken without a government collapsing. Oil exports can fall without forcing political surrender. Sanctions can inflict enormous hardship without producing a negotiated settlement.
For Washington, the ultimate test will therefore be whether economic pressure can produce the political concessions it wants from Tehran.
For Iran, the calculation is different: whether it can withstand the squeeze long enough for the economic and political costs of the war to become uncomfortable for Washington and its allies.
The Iran war is consequently entering a phase where sanctions, oil, banks, tankers and the Strait of Hormuz may matter almost as much as missiles. And the longer the conflict continues, the more the central question becomes not simply who can inflict greater damage but which side believes it can afford to keep paying the price.
With inputs from agencies