President Donald Trump said in Washington on Monday that he is intensifying economic pressure on Iran, arguing that financial strain can force Tehran to curb its nuclear programme and fully reopen the Strait of Hormuz as military options and intermittent talks fail to deliver a quick end to the war.
Trump said Iran was seeking compensation in any peace talks and that he now intended to demand the same for the United States. He portrayed Iran as nearing financial collapse, telling reporters the country was “broke, totally broke,” that it was not paying its soldiers and that it had inflation of 300%, although administration officials have cited lower figures.
The policy shift comes as U.S. stockpiles of key weapons have dwindled and stop-start negotiations have again stalled. The administration is betting that months of bombing, combined with tighter financial restrictions, have pushed Iran’s economy close enough to breaking point to force its leadership to yield.
Markets reacted quickly. Crude oil prices rose on Monday as investors took Trump’s remarks as a sign that fewer ships would pass through the Strait of Hormuz, a route that handled roughly 20% of global oil supplies before the conflict and remains a key source of Iranian leverage in negotiations.
Iran publicly dismissed the threat of more sanctions. Esmaeil Baqaei, spokesman for Iran’s Foreign Ministry, said on social media that whenever Washington fails at diplomacy it “retreats into sanctions,” warning that the United States risked choking off its own remaining chance of a less humiliating exit from a crisis it created.
The White House has branded its sanctions drive Operation Economic Fury, in place since April 16. Treasury Secretary Scott Bessent has described it as the “financial equivalent” of a bombing campaign, with penalties aimed at countries that buy Iranian oil or bank with Iran.
Analysts say sanctions can add pressure but may not work as quickly as military disruption. Richard Nephew, a senior research scholar at Columbia University who helped direct Iran sanctions strategy in the Obama administration, said their value is limited because Trump has not clearly defined whether his war aims centre on Iran’s nuclear programme, the strait or ballistic missiles.
Juan Zarate, a deputy national security adviser in the George W. Bush administration, said sanctions and the ongoing U.S. naval blockade of Iranian ports still give Washington economic leverage, including pressure on third countries doing business with Iran. But he cautioned that such measures take time and depend on how far the United States is willing to go to squeeze Iran’s oil trade.
Trump’s latest emphasis on sanctions marks a reversal from his long-running criticism of earlier presidents who relied on them. In a speech last week in Las Vegas, he defended the bombing, missile and drone attacks that began on Feb. 28, saying sanctions dating back to November 1979 had failed and insisting that “Iran cannot have a nuclear weapon.”
The economic toll on Iran has been severe. The International Monetary Fund estimates the economy will shrink by 5.4%, the Iranian government has reported annual inflation of 88.6%, and the U.S. Treasury Department said average loadings of Iranian oil have fallen from 1.8 million barrels per day before the war to less than 500,000 barrels per day over the past month.
The U.S. economy has continued to grow, but inflation remains elevated and borrowing costs have risen, hurting Trump’s popularity and fuelling disapproval of the Iran war. Defense Secretary Pete Hegseth, appearing with Bessent on Monday, said U.S. power rests not only on military force but also on “the most powerful economy in the world,” signalling that Washington believes it can sustain the pressure longer than Tehran can endure it.
