Military pressure has weakened Tehran's control of Hormuz. Now Bessent will try to turn that advantage into an economic and diplomatic breakthrough.
Whatever else happens, the coming week could prove decisive in America’s six-month conflict with Iran.
The United States appears to have gained the tactical advantage in the Strait of Hormuz, while Treasury Secretary Scott Bessent begins the most ambitious stage of his campaign to isolate Tehran financially. Neither development guarantees peace. Together, however, they may give Washington its strongest opportunity yet to compel Iran to reconsider the war.
The immediate danger is retaliation for Sunday’s American strike on Larak Island. U.S. forces destroyed two Iranian rocket launchers that, according to Central Command, Revolutionary Guard personnel were preparing to use to deploy sea mines. Iran reported military and civilian casualties and promised a response.
Iran has reportedly fired missiles toward an American base in Jordan. Tehran could also target U.S. ships, Gulf energy facilities or commercial vessels. But its response may remain deliberately limited. Iran must demonstrate that attacks on its territory carry consequences without provoking another punishing American air campaign.
That balance favors the United States. American forces have cleared mines from the principal international shipping channel and substantially degraded Iran’s ability to control Hormuz. Commercial traffic remains below its prewar level, but it has risen to a monthly high. Increased Saudi production and alternative Iraqi export routes have also reduced Iran’s leverage.
Sunday’s strike reinforced a straightforward American position: Washington will not allow Tehran to re-mine international waters. If the United States can enforce that boundary without returning to weeks of widespread bombing, the administration may demonstrate that it can contain Iran militarily while shifting the main burden of the war to economic pressure.
That shift begins in earnest Monday, when Bessent hosts G20 finance ministers and central-bank governors in Asheville, North Carolina. Iran is expected to arise in nearly every bilateral meeting. The administration will ask foreign governments to choose between maintaining business with Iran and retaining access to the American financial system.
The pressure is no longer theoretical. Iran’s foreign trade has fallen approximately 35 percent, annual inflation has reached 66 percent and ordinary Iranians are struggling with rapidly rising prices. President Masoud Pezeshkian and other officials are openly acknowledging that the country’s economic position is becoming unsustainable.
Bessent has already moved against the United Arab Emirates branches of Egypt’s Banque Misr over alleged transactions connected to Iran. He says another bank will be targeted shortly. The message to financial institutions is clear: doing business with Tehran could endanger access to dollars and American markets.
The greatest test will be China, which reportedly purchases roughly 90 percent of Iran’s exported crude. Washington probably cannot persuade Beijing to abandon Iranian oil altogether. It may nevertheless frighten Chinese banks, shippers and insurers into reducing their exposure. Even partial compliance could force Iran to offer larger discounts, use less efficient payment networks and accept greater risks to move its petroleum.
This pressure may also revive diplomacy. Iran and Oman have discussed a temporary shipping corridor through Hormuz, while Qatar and Pakistan continue exploring a broader settlement. Tehran wants sanctions relief, compensation and an end to the American blockade. Washington wants genuine freedom of navigation and enforceable Iranian concessions.
The two positions remain far apart, but Iran’s willingness to formulate conditions suggests that at least part of its government is looking for an exit.
For Americans, the most encouraging development would be a relatively quiet week: a contained Iranian response, continued shipping growth and evidence that foreign banks are withdrawing from Iranian commerce. Oil briefly rose above $90 after Sunday’s strike, while regular gasoline remains above $4 nationally. If markets conclude that Hormuz is becoming safer, crude prices could retreat and eventually provide motorists with some relief.
There are serious pitfalls. A successful Iranian strike killing Americans could trigger another major exchange. A damaged tanker could reverse recent progress and send oil sharply higher. Iran may also turn toward deniable cyberattacks: more than 100 American water systems reportedly faced attempted intrusions in July, although authorities have not publicly attributed all of them to Tehran.
Bessent’s campaign could falter if China openly defies Washington or if allies view secondary sanctions as excessively disruptive. Economic desperation might encourage Iranian compromise, but it could also produce reckless escalation.
Still, the underlying trajectory is cautiously favorable. Iran’s strongest weapon — its ability to choke Hormuz — is weakening. Its economy is deteriorating faster than America’s willingness to sustain pressure. If Washington remains disciplined, protects domestic infrastructure and leaves Tehran a path to retreat without granting it control of international waters, the coming week could mark the point at which military containment begins producing diplomatic results.
(Contributing writer, Brooke Bell)