Launching an ‘economic onslaught’ on Iran, US Treasury Secretary Scott Bessent said that President Donald Trump is making phone calls to world leaders with specific requests to stop all interactions with Iran.The move comes amid the ongoing US-Iran conflict which has shaken the world economy and global oil markets since the end of February this year. Bessent said Monday that the new US sanctions are intended to shut off every potential source of revenue for Iran, while warning other countries that continuing their economic ties with Tehran could expose them to retaliation.He said it was “no longer acceptable to operate in the gray spaces” of the conflict.The US has imposed sanctions on Iran for decades. These measures prevent designated entities from accessing the dollar-based financial system.Iran, however, has managed to evade the restrictions by quickly setting up new front companies and other entities, as well as registering vessels under new arrangements.“Iran now faces a very clear choice, with only two paths before them: complete global isolation and a subsistence economy, or a path back to normalcy with an opportunity to rejoin the global economy. Today, we are launching Operation Economic Outcast to foreclose every other option available to the Iranian regime,” Bessent said.“Beginning today, the actions of the Treasury and other agencies will tighten the noose and block every potential source of revenue that funds the IRGC and the evil Iranian regime. We are enforcing a zero leakage approach. There will be no minimal breathing space for the regime to rebuild its capacity to inflict terror against America and the world,” he added.
Operation Economic Outcast: What Bessent announced
“Iran’s enablers purchase, transport its petroleum. They facilitate the flow of its finances through exchange houses and free trade zones. They welcome Iran’s flights and maintain registries on its behalf. They turn a blind eye to seaborne fuel transfers and overland transits. They condone illicit use of their banks, all the while concealing the extent of their complicity,” Bessent said, warning countries of secondary sanctions.He did not specify which countries could potentially be targeted with secondary US sanctions. China, Turkey and the United Arab Emirates, however, are Iran’s biggest trading partners.“Let there be no ambiguity as to the position of the United States,” Bessent told a news conference. “An economic engagement of any kind with this murderous regime will expose those responsible to the full reach of American power.”China buys crude oil in huge quantities from Iran. Asked specifically about possible sanctions on China, Bessent said, “We want to make clear today that no one is above the reach of US sanctions. We find that the best way to engage with countries is through quiet diplomacy.”The Treasury Department has also sanctioned nearly 60 entities, individuals and vessels.China has been the largest purchaser of Iranian oil for several years, and the US has stepped up efforts to restrict those purchases. However, it has so far refrained from designating major Chinese banks that could be facilitating the oil trade.
What US steps could mean for India’s oil imports
India has not been importing oil from Iran due to US sanctions. However, amidst the Middle East conflict when the Trump administration waived sanctions on Iran oil at sea to ease global crude oil prices, India also picked up Iranian crude to ease pressure on its energy security.In the last few months no fresh crude shipments from Iran have been picked, and India’s diversified oil procurement basket has meant that there are no disruptions in the absence of oil from Iran.Therefore, Iran oil being sanctioned would not impact India as much in terms of supply, as it would in terms of prices.China is the biggest importer of Iranian crude. But if the Trump administration’s pressure manages to reduce China’s imports, it will look elsewhere for its supplies. This in turn will likely raise global crude oil prices which would impact India.“India’s bigger risks are higher oil prices, disruption in the Strait of Hormuz and the Sanctioning Russia and Iran Act of 2026, passed by the US Senate on August 7 by an 86–11 vote. If enacted, it could authorize tariffs of up to 100% against major buyers of Russian energy,” Global Trade Research Initiative (GTRI) founder Ajay Srivastava cautions.
What it could mean for India-Iran trade
As of now it is unclear whether there would be any direct impact of the secondary sanctions that the US has threatened. The five broad fields of sanctions are: digital assets, technology, gold, aviation, and shipping.Indian exports to Iran declined from $3.5 billion in FY2019 to $1.2 billion in FY2026. Rice made up $810 million of exports, followed by tea and coffee at $82 million, medicines at $63 million, bananas at $54 million, sugar at $48 million and pulses at $34 million.India’s imports from Iran have also dropped sharply, from $13.5 billion in FY2019, including $12.4 billion worth of crude oil, to below $375 million in FY2026.Bitumen was the largest import at $138 million, followed by apples at $41 million, almonds at $36 million and dates at $35 million.Meanwhile, according to a Reuters report, Indian exporters have said that planned new US sanctions on Iran, along with the UAE’s decision to suspend trade with Tehran, could disrupt India’s exports of rice, tea and pharmaceuticals to Iran. Much of this trade has been routed through Dubai’s port in recent years.India has remained one of Iran’s five largest trading partners, although bilateral trade has dropped by more than 90% from its FY2019 peak of $17 billion. Exports are now largely restricted to goods that are exempt from sanctions on humanitarian grounds.Exporters in India are concerned that the Trump administration’s plan could put further pressure on trade that has already been weakened by sanctions, cautious banks and shipping constraints.The United Arab Emirates last week suspended all trade activities, exchanges and financial transactions with Iran until further notice.“We are already seeing indications that transactions and payment mechanisms traditionally routed through the UAE are exploring alternative jurisdictions,” said Dev Garg, vice president of the Indian Rice Exporters Federation, suggesting Turkey as an alternative.In the first six months of 2026, India exported $383.11 million worth of rice to Iran, making the country the second-largest overseas market for premium rice, including long-grained basmati.“Any prolonged disruption in this corridor will have a much greater bearing on the basmati industry, especially on millers and exporters in northern India than on India’s overall non-basmati rice trade,” Garg said.Until recently, Indian exporters generally received payments through an Indian authorised-dealer bank from the account of a UAE-based trader. Payments were made in dirhams, dollars or another permitted currency, while the trader separately received payment from its Iranian customer through banking channels that complied with legal requirements.India’s tea exports to Iran stood at $14.34 million during the first half of 2026. Prabhat Bezboruah, a senior tea planter and former chairman of the state-run Tea Board, said tea sales to Iran would be hit because a significant portion of the trade passes through the UAE.
