The US and Israel started a war with Iran in February, arguing the strikes were to prevent Iran from developing nuclear weapons, which Tehran has consistently denied. Since then, Iran has largely closed the Strait of Hormuz - the waterway through which some 20% of the world's oil and liquefied natural gas used to transit - causing wild fluctuations in prices on world markets.

The US and Iran agreed a ceasefire in April - and then another one in June, both aimed at facilitating negotiations to end the conflict. Bessent said the new economic penalties will be part of "the greatest co-ordinated economic isolation in the history of the world"."

If you insist on doing business with them, either transferring money, buying their oil... then the US Treasury and the US government will put [their] full might and force towards enforcing against you," the treasure secretary said referring to the US's international trading partners.

Bessent confirmed further details about the plan will be made public at a press conference on 24 August. The Iranian economy has long been struggling under the weight of decades of international sanctions, which left it in tatters.

Earlier this year, Iran experienced weeks of protests due to the spiralling cost of living and inflation – with everyday Iranians blaming the regime for their difficulties. Official figures show that in the 12 months to February 2026, the price of basic necessities increased by an average 60%, while food prices doubled in the same period.

The attacks on Iran ensued - and later led to the US to imposed a blockade of Iranian ports, threatening further sanctions. In April, the US launched a wave of sanctions on foreign banks and firms doing business with Tehran after it became apparent military operations had not led to the overthrow of Iran's regime nor its surrender, as Trump had initially hoped.

Operation Economic Fury, announced by the US Treasury Department and the Pentagon, aimed at degrading Tehran's warfighting capability by cutting off its revenue streams, and also included a naval blockade aimed at stopping Iranian exports. The Memorandum of Understanding (MoU) signed by Iran and the US in June included a clause stating that the US would "terminate all types of sanctions" against Iran in an agreed-upon schedule.

Iran is no stranger to sanctions – a raft were first imposed shortly after the Islamic Revolution of 1979, during the US embassy hostage crisis. Since then, more sanctions have been implemented, but the Iranian government has not collapsed - in fact it has succeeded in controlling dissent, most recently by cracking down on the protesters earlier this year.