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Oil Prices Fall as U.S. Prepares New Sanctions Against Iran
ReOil Prices Fall as U.S. Prepares New Sanctions Against Iran
Oil prices dropped Monday as Treasury Secretary Scott Bessent prepared to announce an escalation of sanctions against Iran, including secondary penalties on countries that continue trade with Tehran. Iran's rial hit a record low amid the economic pressure.
Oil prices fell Monday as the Trump administration prepared to announce an escalation of sanctions aimed at further isolating Iran's economy. Treasury Secretary Scott Bessent is expected to unveil the new measures, which include secondary sanctions on countries that continue doing business with Tehran, according to officials familiar with the plan.
The announcement comes as Iran's currency hit a record low, with the rial dropping to 2.02 million against the U.S. dollar at market open. The official central bank rate stood at around 1.5 million rial to the dollar, but most Iranians pay the market rate. The currency had already been under pressure before the U.S. and Israel attacked Iran on Feb. 28, as the country faced double-digit inflation and negative economic growth.
Nearly six months of war have taken an additional toll on the Iranian economy. Rice prices are up 60 percent and beef prices have risen more than 150 percent since the conflict began, making daily staples increasingly unaffordable for ordinary Iranians. The International Monetary Fund forecasts that Iran's gross domestic product will contract by more than 5 percent this year.
Bessent previewed the strategy Sunday in an opinion piece in the Financial Times, writing that "President Trump decimated Iran's economy to a point where the rial has never been weaker and inflation has rarely been higher." He added that "the regime's final refuge now lies in the self-deception of fearful nations that still believe accommodating aggression can secure a durable peace."
During a press conference at the Treasury Department on Monday, Bessent unveiled the plan, officially named Operation Economic Outcast. "Nations that facilitate any interactions with the regime should quickly heed our message: those who stand with the United States will reap the rewards of our partnership — those who tether themselves to the Iranian regime should expect to share in the isolation of a withering regime," he warned. "Every country has a defined timeline to shut down activities we have identified. Any entity that facilitates money laundering on behalf of Iran will be removed from the U.S. dollar system. The clock just started ticking."
Iran retains a strategic advantage despite the economic pressure. Its attacks and threats on ships in the Strait of Hormuz have brought traffic in the vital waterway to a near halt, damaging the world economy and heaping pressure on President Trump ahead of congressional elections. The war has devolved into a fight over who controls the strait, through which a fifth of the world's traded oil transited before the conflict. Iran is now refusing to fully reopen it unless it can charge ships.
Iran and Oman, which sits on the opposite side of the strait, are reportedly in the final stages of agreeing on a plan for joint management of the waterway. Oman's foreign minister is set to visit Iran on Tuesday. Last week, the United Arab Emirates announced it was suspending all trade with Iran. The UAE has long been one of Iran's largest trading partners and its biggest source of imports.
Iran's Foreign Ministry spokesperson Esmail Baghaei told reporters in Tehran on Monday that "any escalation of this situation will undoubtedly bring about consequences." "Our hands are not tied," he added. Pakistan, which played a key role in brokering a 60-day ceasefire in June, sent a high-level delegation to Iran on Monday to discuss ending the war, the military said.
Economic pressure has not yet translated into political pressure inside Iran. In downtown Tehran, 73-year-old Sadegh Mahmoudi joined a line of about a dozen people to purchase U.S. dollars with his remaining savings to hedge against further declines. "There is no hope for a deal and peace," he said.
