The Trump administration is tightening its economic squeeze on Iran, with allies halting Iranian flights and cutting off Iranian banks, as President Donald Trump rejected Tehran's offer to end the war.
Whether the pressure will force concessions or provoke further escalation remains unclear. The conflict has pushed Brent crude above $100 a barrel and supertanker rates to a record $1.27 million a day.
US Treasury Secretary Scott Bessent dispatched envoys around the world to pressure countries to economically isolate Iran.
"At my direction, teams were dispatched across the globe to engage with countries and demand action against the Iranian regime," Bessent said on X on Saturday. "These efforts are delivering results."
A Wall Street Journal article shared by Bessent said Jonathan Burke, the Treasury's assistant secretary for terrorist financing, traveled across the Middle East and Europe over two weeks to push the plan to impose what Bessent called "economic D-Day" on Tehran.
The Treasury has held discussions with more than 50 countries, the Journal reported.
Allies Suspend Flights
Bessent pointed to Turkey and Oman ceasing Iranian Mahan Air flights to their countries. The United Arab Emirates (UAE) has halted all flights by Iranian airlines.
Iraq has suspended flights to and from Iran from all four airports from which they were operating, Reuters reported. They include Baghdad, Najaf, Erbil and Sulaimaniya.
Washington had announced it would impose sanctions on any global companies doing business with Iranian airlines after September 23.
The aim is to ground Iran's entire civilian fleet worldwide.
New Banking Restrictions
The Trump administration is also pushing allies to impose new banking restrictions, according to Bessent.
On Wednesday, the UAE central bank blocked transactions to and from Iran by branches of Iran's Bank Melli. It cited violations of rules on money laundering, terrorist financing and proliferation financing, which covers funding for weapons programs.
Last week, Turkey revoked the license of Iran's Bank Mellat, a semi-private financial entity that has been subject to Western sanctions for years.
Washington wants to eliminate resources Tehran "uses to threaten regional stability, support terrorism, and advance its military capabilities," the State Department said on September 4.
U.S. Protects Hormuz Shipments
US Energy Secretary Chris Wright told Fox News that oil flows through the Strait of Hormuz are averaging almost 13 million barrels a day.
Independent data point the same way. More than 13.5 million barrels a day are clearing the strait on a seven-day average, Rory Johnston, founder of oil research firm Commodity Context, posted on X.
"The dominant narrative on Iran – that it has asymmetric leverage over the U.S. – is wrong," Robin Brooks, a senior fellow at the Brookings Institution and former chief economist at the Institute of International Finance, posted on X.
"Iran has played its hand very badly," he added. "It's lost control of the Strait of Hormuz, where tanker traffic is the highest in many months. This means Iran has nothing to offer Trump in negotiations, even as its economy is in complete and utter meltdown."
Iran Wants Negotiations
Iran is pushing for a negotiated solution to its conflict with the U.S. and Israel.
Its proposal, announced at the UN General Assembly and passed on through Qatari mediators, offered to reopen Hormuz within seven days if Washington lifted its blockade and unfroze Iranian assets.
Trump told reporters at the White House on Saturday that he rejected the plan. He claimed Iran was pushing for a quick agreement because it is "losing so badly."
Vali Nasr, a professor at Johns Hopkins University's School of Advanced International Studies, said Trump's rejection of the proposal was "not a surprise."
He described the offer as a demand "with implementation terms favorable to Iran," in a post on X.
Iran's Economic Crisis Deepens
Trump's claim that Iran is "losing so badly" has some support in the numbers.
Iran's Statistical Center reported that real GDP fell 10.1% year over year between late March and late June. Oil and gas extraction, the country's main source of foreign currency, dropped 26.4%.
Government data showed prices in July were 88% higher than a year earlier. Food inflation topped 128%. The rial has lost about half its value over the past year. On September 8, the dollar traded at up to 2.4 million rials on the open market.
Not everyone sees imminent collapse, however.
"We should be a little bit cautious about the view that the Iranian economy is simply on the verge of collapse," Mehrdad Sepahvand, a former economic adviser to the Central Bank of Iran, told CNBC in August.
Still, the crisis is reaching ordinary Iranians. About 800 pharmaceutical products are in short supply nationwide, Al Jazeera English reported.
Risk of Escalation
Some analysts warn the strategy could backfire.
"Trump has rejected the Iranian proposal, interpreting #Iran's stated desire to reach a deal as a sign of desperation and as evidence that pressure is working," Hamidreza Azizi, a visiting fellow at the German Institute for International and Security Affairs (SWP) in Berlin, posted on X.
"This only strengthens the argument of those in Tehran who maintain that the only way to reach a deal with Trump is to strengthen Iran's position," he said.
"For that reason, I would not be surprised to see further Iranian escalation in the Strait in the weeks ahead of the midterms, with the aim of confronting Trump."
