Six months into the military conflict between the United States, Israel, and Iran, Washington is shifting its tactical focus toward a massive financial campaign. On Monday, U.S. Treasury Secretary Scott Bessent unveiled “Operation Economic Outcast,” a strategy he characterized as “the single greatest financial offensive ever” directed at Tehran. Describing the initiative as an “economic D-Day,” Bessent warned that the U.S. is prepared to penalize any bank or business that continues to facilitate Iranian revenue, declaring that “no one is above the reach of U.S. sanctions.”
The Treasury Department has already moved to sanction 60 specific entities, vessels, and individuals across the United Arab Emirates, China, Hong Kong, Singapore, and Switzerland, alleging they have been instrumental in supporting Iranian trade. These measures are designed to choke off the country’s remaining income streams, with Bessent emphasizing that Tehran’s international trading partners now face the threat of secondary sanctions if they persist in converting Iranian oil into capital.
The Iranian government has responded with sharp warnings. Mohsen Rezaei, Secretary of the Supreme National Security Council, stated last week that if regional neighbors join the American economic campaign, Iran would ensure that “not a drop of oil will leave the Persian Gulf and the strait of Hormuz.” This threat carries significant weight, as the waterway serves as a critical artery for one-fifth of the world’s oil and natural gas supply.
For Gulf states, the situation presents a precarious paradox. While the U.S. military presence provides a necessary shield against Iranian missile and drone attacks, that same alliance is now drawing them into a high-stakes economic confrontation. Analysts note that while the UAE has already committed to cutting trade ties with Tehran, other nations like Saudi Arabia, Qatar, and Oman are navigating a more cautious path. Saudi Arabia, in particular, has pursued a pragmatic approach since the 2023 China-brokered restoration of diplomatic relations with Iran, and remains wary of the regional instability that could follow a total collapse of the Iranian government.
Iranian political analyst Mostafa Khoshcheschm dismissed the latest U.S. announcement as a “political show” intended to intimidate regional neighbors. He compared the current strategy to the “maximum pressure” campaign of the first Trump administration, which ultimately failed to force a renegotiation of the JCPOA nuclear agreement and resulted in a U.S. withdrawal from the deal in 2018. Khoshcheschm argued that the current measures are even less effective than those previous efforts.
Despite the skepticism, Washington appears to believe the economic tide is turning. Trita Parsi, executive vice president of the Quincy Institute for Responsible Statecraft, suggests that the U.S. calculates that rerouting maritime traffic through Oman and a broader shift away from Gulf oil dependency have diminished Iran’s leverage. From Washington’s perspective, the current status quo imposes heavier costs on Tehran than on the U.S., leading to the belief that the administration can afford a prolonged standoff.
However, the success of this strategy hinges on whether global powers like China, India, and Russia will comply with U.S. demands. Furthermore, the UAE’s decision to end trade with Iran is significant, as Dubai has historically served as a vital hub for Tehran’s access to foreign currency. Simon Mabon, a professor at Lancaster University, noted that the UAE’s firm stance is driven by the fact that it has been the primary target of Iranian hostility in recent months, making the Emirati position a reflection of both its security experience and its commitment to the U.S.-led Abraham Accords.
As the conflict continues, Gulf nations are likely to prioritize diplomacy over further escalation. There is a widespread concern that aggressive sanctions may serve as little more than a gateway to deeper regional instability, potentially inviting further Iranian retaliation across the Gulf. While Washington pushes for a total economic blockade, the regional powers remain focused on the delicate task of avoiding a wider war. The report also notes that gulf states have repeatedly found themselves caught in the crosshairs during the US-Iran war as Iran has targeted US military assets and infrastructure in neighbouring countries. The report also notes that economic pressure may appear preferable to another round of US and Israeli missile strikes. The report also notes that but also makes their territories potential targets, iran’s stance leaves Washington’s Gulf allies facing an uncomfortable paradox: the US military presence helps protect them from Iranian missiles and drones. The report also notes that the latest wave will target five of Iran’s most important remaining economic lifelines: digital assets, technology, gold, aviation and shipping, while the US and other countries have sanctioned Iran’s oil and financial sectors for decades. The report also notes that contrary to Trump’s indications at the start of the war that it would last for a matter of weeks, the ramped-up emphasis on economic pressure comes as months of war have failed to produce a decisive outcome for the US. The report also notes that meanwhile, US media reports that supplies of missiles and air defence interceptors in the Middle East may be running low – vehemently denied by the Trump administration – have incentivised Washington to pursue other means of pressuring Tehran, observers say.