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Donald Trump has said the US is mounting a fresh campaign of “economic warfare” against Iran, while warning that there would be “tremendous” consequences for any country that trades with the Islamic republic.
“I am announcing the MOST CRUSHING ECONOMIC OPERATION EVER TAKEN AGAINST ANY COUNTRY!” the US president said in a post on his Truth Social platform late on Wednesday. “This will be an ECONOMIC D-DAY, and we need all of our Allies to stand with the United States of America to isolate, and defeat, the Iran threat.”
His latest warning to Iran follows weeks of tortuous diplomatic efforts which Trump hoped would secure a new deal with Tehran to fully reopen the Strait of Hormuz, a vital artery for world oil and gas supplies.
But those talks stalled after Iran insisted it would only allow shipping through the waterway if the US met its conditions, including lifting a naval blockade on Iranian ports and allowing Tehran to access its assets frozen in accounts overseas.
Trump, who said this week there were no talks with Iran, now appears to be betting that the US blockade on Iranian ports will increase pressure on the Islamic republic’s beleaguered economy and cause Tehran to cave in to his demands.
An Arab diplomat said Trump had shifted to a strategy of “strategic patience”. The war, in its sixth month, has become a battle of wills, with the US and Iran competing for control over the strait and each side believing it can inflict more economic pain on the other.
Iran’s attacks on shipping and throttling of traffic through the strait have triggered a global energy crisis, while the conflict and the US blockade have increased pressure on the Iranian economy, with runaway inflation and the rial slumping to new lows.
Brent crude, the international benchmark, was up slightly to $92 a barrel on Thursday.
Trump administration officials have insisted that despite Iran’s chokehold over the Strait of Hormuz, crude is flowing through the waterway. US energy secretary Chris Wright said last week that the seven-day average for oil leaving the strait was “currently up to almost 9mn barrels per day”.
Most traders believe the number to be between 4mn and 6mn barrels a day but caution that the actual amount is difficult to gauge because some tankers are moving with their transponders turned off.
Before the war, about 20mn barrels of crude and refined products were flowing through the Strait of Hormuz each day. Saudi Arabia and the United Arab Emirates are now shipping oil through pipelines to avoid the strait, making up for some of the losses caused by the battle over Hormuz.
On Tuesday, the UAE, one of the US’s closest regional allies but also a vital trading hub for Iran, said it was suspending trade and commercial ties with Iran. It took the decision hours after accusing Tehran of firing two ballistic missiles towards the Gulf state that were targeting shipping but which fell into the sea.
Iran denied any involvement in the attack.
The UAE’s foreign ministry said that “in light of regional escalations that undermine regional and international peace and security, all trade, commercial exchanges and financial transactions with Iran have been halted until further notice”.
The incident came after more than two months in which the UAE and Tehran were trying to reduce tensions, with the Gulf state allowing Iranian airlines to resume flights to Dubai and traditional dhows to restart trade with Iran.
In his post on Wednesday, Trump said he was “announcing that ANY country that allows its financial institutions, businesses, airports, or government entities to provide any type of lifeline to Iran will itself face TREMENDOUS Economic Consequences”.
“Oil smuggling, swap lines, cash transfers, exchange houses, ship registries, front companies — It all needs to stop NOW,” Trump said. “You know who you are.”
Iran brushed off Trump’s latest threats.
“The so-called ‘Economic D-Day’ is a diversion from America’s own crisis: unprecedented debt & surging interest costs,” Iranian foreign minister Abbas Araghchi posted on X. “Doubling down on failed policies will only bring further defeat — and enmity of Iranians. US economic terrorism threatens global economy and sovereignty worldwide.”
The Islamic republic, which has endured decades of US sanctions, including a “maximum pressure” campaign Trump imposed during his first term as president, believes it has a far higher pain threshold than Washington. Analysts say any increased economic pressure is unlikely to force Tehran to cave in, as it views the war with the US as an existential battle for its survival and thinks it has the upper hand.
“The Islamic republic has operated under intensifying economic pressure and sanctions since 2011,” said Sanam Vakil at Chatham House. “Trump once again appears to underestimate the resolve of Iran’s leadership, which views resistance rather than capitulation as the only viable path to regime survival.”
