‘purely Just Up To Iran’: Bessent’s D-day Unlikely To End War, Calm Energy Markets

Treasury Secretary Scott Bessent’s latest plan for Iran — what he called an “economic D-Day” — is supposed to end the war and tame the oil markets.

Energy market analysts and even some Trump allies fear it won't do either.

At best, the financial offensive Bessent announced on Monday intended to squeeze Iran into submission through “quiet diplomacy” will prolong a war that has already dragged on for nearly six months. At worst, the effort to further isolate Iran from the global economy could back Tehran into a corner, and push its leaders to up their attacks on U.S. bases, allies and key energy infrastructure in the region.

Either way, energy markets already roiled for months by the war are likely to stay volatile, despite the Treasury secretary’s recent pleas. And if Iran responds by destroying more regional energy infrastructure, it could lock in a longer-term market disruption, experts said.

“You can game the market effect all you want to, but how do you respond in the moment to how Iran plans to offset this?” said Behnam Ben Taleblu, Iran program senior director at the hawkish Foundation for Defense of Democracies think tank. “As the asphyxiation gets closer, the thrashing becomes more violent.”

Bessent’s Monday announcement included the imposition of new sanctions on 60 Iran-linked entities, including corporations, vessels and individuals. He called it a “warning shot” and said harsher sanctions are on the table if countries do not comply. But there’s little indication so far that these economic sanctions will truly pinch China, one of Iran’s main customers for crude.

The new economic pressure campaign likely offers little immediate relief to consumers. That’s bad news for an American electorate weary of rising costs for everyday goods such as groceries and gasoline. And that in turn could be bad news for the GOP, which is trying to hold on to its majority in the impending midterm elections.

And it comes at an increasingly precarious time for energy markets. Storage volumes are reaching tank bottoms. Only a fraction of the 20 million barrels of Middle Eastern oil that flowed through the Strait of Hormuz pre-war can get through now.

Meanwhile, domestic gas prices are hovering around $4.10 per gallon, according to AAA — the highest it’s been this late in the year,  without adjusting for inflation.

Limited refinery capacity has contributed to a spike in the cost of diesel fuel — considered the backbone of the economy — which is nearing a record high.

Still, White House aides have continued to insist that the president’s efforts, from the ongoing naval blockade of Iranian ports to demining the Strait of Hormuz, have been successful in keeping oil flowing.

“The United States will not let up on Iran’s collapsing economy, and Operation Economic Outcast will sever every financial lifeline that sustains the terrorist regime,” said White House spokesperson Taylor Rogers.

Ongoing tensions with Iran guarantee a longer period of uncertainty for the markets, said Brett Erickson, managing principal at Obsidian Risk Advisors. It also shows the world that Iran still in effect controls the strait, he said — a contention Trump has repeatedly denied.

“It does show a willingness for the Trump administration to continue to play with fire, and that if Iran responds severely, it could be really damaging for the global energy market,” he said. “It's really purely just up to Iran.”

Iranian leadership has already announced that the first step will be to fully shut off the reduced flows of oil now escaping the strait.

“If the economic war continues, not a single drop of oil will be exported, neither through the Strait of Hormuz nor from anywhere in the Persian Gulf,” Mohsen Rezaei, the secretary of Iran's Supreme National Security Council, wrote on X Sunday. “Iran will regard any country’s participation in or support for America’s economic war against the Iranian people as an act of war.”

Energy markets are so far taking the news in stride. The price of crude oil dipped below $90 after Bessent’s announcement after days of trading higher. The administration has also claimed that higher volumes of oil are flowing through the strait as a result of military escorts.

Thus far, the sanctions have done little to deter Tehran. On Monday, Iran attacked an oil tanker traversing the Strait of Hormuz, and Iran-aligned Houthis claimed responsibility for an attack on a second vessel in the Red Sea. And Iranian state television on Monday broadcast a video threatening Barron Trump, which the Secret Service has said it is aware of.

“The administration might think that it is choosing a very intelligent strategy where it can keep the pressure on Iran but not pay the political cost of continued military action. But I don't think Iran is going to let them necessarily get away with that,” said Esfandyar Batmanghelidj, an expert on Iran’s economy and U.S. sanctions who leads the Bourse & Bazaar Foundation, a think tank focused on economic diplomacy in West and Central Asia. “Given that they cannot respond in kind, they will use military action … in order to make sure that Trump pays a cost.

And while Bessent said Monday that the U.S. would “sever every economic lifeline that sustains this tyrannical regime until Tehran stands alone,” it has yet to do so. The administration did not, for instance, step up its sanctions on China’s teapot refineries, which handle much of the Iranian crude. Nor did it sanction Chinese banks that work with Iran.

China, which buys 90 percent of Iran’s oil, has shown little sign of cooperating with the Trump administration’s plans.

Instead Beijing chafed at the U.S.’s efforts to menace it into compliance, with the country’s foreign ministry saying on Tuesday that it continues to oppose unilateral sanctions that have no basis in international law or the authorization of the United Nations Security Council.

“Economic warfare and maximum pressure provide no solution,” said Lin Jian, Chinese Foreign Ministry spokesperson. “On the contrary, they only serve to fuel tensions and lead to risk spillover, which will disrupt the global economic and financial order, and harm the legitimate rights and interests of other countries.”

The Iranian regime also has a long history of weathering sanctions under multiple administrations while remaining in power, said Roger Diwan, vice president for S&P Global Energy, at an event hosted by the Center for Strategic and International Studies on Monday. He said the economic pressure campaign shows “the incremental gain we have is very small,” but the risk to regional energy infrastructure remains very high.

“The response to that incremental level of sanction is now putting all the energy assets in the region on the table on the Iranian side,” he said. “So you have a very different reaction and strategy on the Iranian part, which is to basically say, if you escalate a little bit, we're going to escalate a lot more.”

Phelim Kine and James Bikales contributed to this report.