Stocks surged, oil slid as Trump blinked on Iran after launching economic fury
Trump is looking for a face-saving exit from his Iran war mess ahead of the midterm election as Operation Epic Fury on Iran now turns into Epic Tragedy.
Trump offered Iran the same narrative of reopening the SOH against the US assurances of sanctions withdrawal and release of frozen funds.
But Iran may not trust Trump and may continue the war of attrition on Trump till at least the Nov. '26 midterm election, in which Trump & Co. are set to lose badly.
On Monday, August 24, 2026, all focus of the market was on the US Treasury (TSY) Secretary Bessent, apart from Trump’s ‘daily circuses’ (TV reality shows) from the Iran war to the trade war (the latest victim is Canada). As widely expected, on August 24, the Trump administration led by Bolton officially launched "Operation Economic Outcast"—a sweeping global campaign of rhetoric, supposedly designed to enforce a zero-leakage financial blockade and completely isolate Iran from the international financial system through strict secondary sanctions in any country that even dares to think about transacting with the ‘rogue country’ (Iran). Formally unveiled on Monday by Bessent, the Trump administration has explicitly framed this rollout as an "economic D-Day."
The Five Targeted Lifelines of Iran
The core of Operation Economic Outcast introduces new sectoral secondary sanctions determinations specifically designed to cut off the exact avenues. Iran uses to bypass traditional financial networks:
Digital Assets & Cryptocurrency
Advanced Technology
Gold and Precious Metals
Aviation Networks
Maritime Shipping Operations
Bessent announced that the Treasury's Office of Foreign Assets Control (OFAC) has immediately blacklisted over 60 entities, individuals, and vessels globally. Any international financial institution found facilitating gray-market transactions or laundering money for Tehran faces a strict deadline before being permanently expelled from the US dollar system. Bessent explicitly warned to expect a major announcement penalizing a non-compliant foreign banking entity by the end of this week.
Secondary Sanctions: China is not exempt and is the target #1.
The primary objective of the secondary sanctions framework is to pressure third-party countries (led by China) into cutting economic ties with Iran:
The Ultimatum to Beijing: Because China remains Iran's top trading partner and buy-side destination for crude oil, Bessent explicitly noted that China will not be exempt from these secondary measures. He warned that operating in the "gray spaces" of the conflict is no longer acceptable.
The Global Compliance Clock: The Trump administration is assigning individualized compliance deadlines to different countries rather than a blanket enforcement window. Impacted nations include several European states (such as Switzerland) and the United Arab Emirates (UAE). The UAE notably preempted the announcement by declaring a complete halt to Iranian trade following recent cross-border missile strikes.
Full text of US Treasury Secretary Bessent’s prepared comments on proposed secondary sanctions (economic outcast) on Iran’s trading partners
“Today, at President Trump’s direction, the United States Treasury has begun Operation Economic Outcast—an unprecedented campaign against the Islamic Republic of Iran and its enablers.
In the Second World War, D-Day marked the historic beginning of a campaign with our allies to target and drive the enemy from its positions, including those in third countries.
Today, in that same spirit, we are launching an economic onslaught against Iran’s financial connections around the globe. Our objective is to sever every economic lifeline that sustains this tyrannical regime until Tehran stands alone.
Iran’s fanatics devote themselves to “Death to America” and seek nuclear weapons to do just that. They have murdered and maimed more of our citizens and service members than any other terrorist regime on Earth. And they have been at war against America, their neighbors in the Gulf, and much of the world for 47 years.
President Trump has taken action that his predecessors have long deferred. And under his leadership, America is no longer managing the Iranian threat. We are ending it.
Our great armed forces have laid the groundwork for achieving the President's objective of preventing Iran from ever obtaining nuclear weapons. They have shown America’s resolve to finally end this threat. And the strength of America’s economy under President Trump allows us to wage this sustained financial operation alongside the might of our military.
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.
Treasury has mapped every node, every facilitator, and every network that Iran has used to smuggle oil and evade sanctions.
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 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.
The final refuge of this regime is in the mistaken conclusion of nations that still finance the Iranian threat in the hopes of evading it.
It is no longer acceptable to operate in the gray spaces of this conflict. Countries cannot claim that they are blind to enabling this activity.
Iran’s enablers purchase and 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 to overland transits. And they condone the illicit use of their banks, all while concealing the extent of their complicity.
The president is making phone calls to world leaders with specific requests to cease their interactions with the regime.
We are already seeing results.
Over the weekend, comments from Iranian leadership clearly acknowledge the effect of this campaign. And nations that facilitate any interactions with the regime should quickly heed our message. Those who stand with the United States will reap the rewards of our partnership.
Those who tether themselves to Tehran should expect to share in the isolation of a withering regime.
Teams from the Treasury, State Department, and the U.S. military are now meeting with their global counterparts to tell them that the United States expects action. Every country has a defined timeline to shut down activities we have identified. If they do not take action, we will do so unilaterally through Treasury authorities.
For example, every Bank Melli branch must be shuttered.
And let me be clear: any entity that facilitates money laundering on behalf of Iran will be removed from the U.S. dollar system. The clock is ticking.
The new sectoral sanctions determinations issued today target five of Iran’s most vital lifelines that it exploits in other countries: digital assets, technology, gold, aviation, and shipping.
These measures broaden secondary sanctions risk for anyone foolish enough to continue conducting business with this regime—and accelerate the speed with which we pursue them.
As I speak, Treasury’s Office of Foreign Assets Control is also sanctioning over 60 entities, individuals, and vessels across the world that enable the Iranian regime to procure illicit nuclear and missile technology, conduct cyber operations, and generate oil revenue.
This is a sustained campaign to collapse every last option for Iran. Let there be no ambiguity as to the position of the United States: An economic engagement of any kind with this murderous regime will expose those responsible to the full reach of American power.
For decades, this regime has drawn strength from a calculus that regards Iranian retaliation as certain and American enforcement as negotiable. Under President Trump, that era is over.
To the ordinary (Iranian) soldiers supporting this regime: As more and more of your paychecks stop or are supposedly “just delayed,” ─ ask whether your commanders are leading your country to triumph or to ruin. And recall that the Berlin Wall fell when ordinary soldiers decided not to shoot.
And to those who enable Tehran: Do not discount the cost of testing Washington. No nation should expect to enjoy the rewards of our system while helping those who seek to destroy it.
It is now time for world leaders to decide between prosperity and isolation, peace and terror, and America and Iran.
The campaign we begin today will gather force with every day that follows. And it will not end until this regime stands alone.”
Highlights of Bessent’s comments at the presser (Q&A)
Trump would like Canada to come to the table and negotiate in good faith.
We haven't bought a single bond yet; the next operation is Sept 9th. We'll see.
On Iran: Allowed everyone to remedy bad behavior.
A warning shot is appropriate on the Iran initiative.
Should be set to leave the dollar system if there is no cooperation (for any country cooperating with China)
The US is giving foreign entities a ‘warning shot’ over ties to Iran.
We are allowing everyone to remedy bad behavior. Why would I want to blow up the global financial system?
We believe that it is important to level set and give people a cure period, but they should know that that will move very quickly and that we are serious.
We believe that a warning shot and a level-setting of expectations are appropriate.
I would expect that you will see a major announcement of a financial institution being sanctioned by the end of this week.
You will see a wave of sanctions when you leave this meeting today, and you should expect that cadence to continue.
The US launched “Operation Economic Outcast” on Monday, sanctioning nearly 60 Iran-linked people, entities, and vessels and expanding the threat of secondary sanctions against Tehran’s global financial connections. Bessent said Monday that Washington had mapped Iran’s financial networks and would intensify the campaign, which he said was aimed at severing the country’s economic lifelines.
Overall, US Treasury Secretary Bessent called for Iran's isolation, mainly targeting China & Chinese shadow/zombie oil refiners. Bessent also called for a revolt by ordinary Iranian soldiers. Contrary to earlier perceptions, the Trump admin basically launched ‘warning shots’ to ‘friends of Iran’ led by China rather than any actual secondary sanctions. A nervous-looking Bessent left the Q&A presser hurriedly without answering difficult questions.
Iranian Defiance and Geopolitical Blowback
"Desperate" Dismissal: Iranian Foreign Minister Araghchi fiercely condemned the announcement, labeling the "Economic Outcast" program as a "desperate onslaught" that proves Washington has exhausted its kinetic military effectiveness.
Vow of Counter-Retaliation: Tehran has formally issued warnings to regional neighbors and global trade partners, vowing direct military or economic retaliation against any country that cooperates with the fresh US secondary sanctions framework.
Iran’s president tells Pakistan’s army chief the US must change its tone towards Tehran.
Iran’s President Pezeshkian told Pakistan’s visiting army chief Munir that the Trump administration must change its tone and approach in dealing with Tehran: “Relying on coercion and bullying will only complicate the implementation process."
US not ruling out military force in Strait of Hormuz: Hegseth.
The US Secretary of War Hegseth said on Monday that Washington was not ruling out using military force against Iran in the Strait of Hormuz “or anywhere else.
The US will pursue an end to Iran's nuclear threat 'one way or 'another'—Newsmax.
The US State Department spokesperson Tommy Pigott told Newsmax on Monday:
President Trump is determined to bring what his administration sees as the Iranian nuclear weapons threat to an end “one way or another."
The president has been clear that he is going to see the Iranian nuclear weapons threat come to an end. He will see that objective be completed one way or another.
The administration would also seek to cut off every financial lifeline Iran uses to fund what he called “malign activities,” describing the effort as the next level of Trump’s maximum-pressure campaign.
Influential US Democratic Senator Murphy calls Iran sanctions ‘desperate window dressing.'
US Senator Murphy criticized the Trump administration’s new sanctions on Iran, calling them “desperate window dressing” and arguing that Washington had failed to achieve its objectives in the war. On Monday, Murphy tweeted, "D-Day" is desperate window dressing. Iran is winning the war. Trump is losing. And Americans are paying a huge, huge cost. Let's review where we are and why these sanctions are another fool's errand. First, let's recall that NONE of Trump's war objectives have been achieved. The hardline regime is intact and stable. They still have their missiles, drones, and nuclear program. They are even mocking us, giving tours of their new missile sites.
The same sentiments (opinion/analysis) are being portrayed by the US mainstream media, which keeps Trump infuriated.
Any potential real impact of the US’s Iran secondary sanctions on China, Russia, India, and Switzerland
Theoretically, the secondary sanctions under "Operation Economic Outcast" carry severe, direct disruption risks for the banking, energy, and logistics sectors of India. Russia, as Washington applies an unyielding "with us or against us" stance.
China: Major Energy and Trade Friction
The Squeeze on Small Banks: While China's massive state-owned banks have largely cleared out of direct Iranian exposure to protect their Western assets, the new secondary parameters directly target regional Chinese banks and "independent" refineries ("teapots"). These institutions rely entirely on underground banking systems to process restricted crude.
The Microchip and AI Chokehold: The inclusion of an "Advanced Technology" lifeline means Chinese tech firms routing dual-use electronics, telecommunications gear, or semiconductor tooling to Iran face immediate blacklisting.
A High-Stakes Trade War: Because China absorbs over 80% of Iran's seaborne oil exports, strict enforcement by the U.S. Treasury risks sparking a retaliatory trade and tariff war right before the U.S. presidential midterm elections.
India: Chabahar Port and Infrastructure Freeze
The Chabahar Port Emergency: India's flagship strategic asset in the region—the Chabahar Port—sits directly inside the conflict zone of southern Iran. The "Maritime Shipping Operations" and "Logistics" sanctions put Indian state-run port operators at immediate risk of losing access to global maritime insurance, effectively freezing India's main trade gateway to Central Asia.
Rupee-Rial Settlement Halts: The strict digital asset and currency guidelines effectively close the door on alternative, non-dollar currency trade mechanisms that New Delhi has used to maintain non-sanctioned pharmaceutical and agricultural shipments to Tehran.
Refinery Re-Routing: While India heavily curtailed its direct Iranian crude intake under prior U.S. mandates, the threat of sweeping secondary sanctions forces Indian oil corporations to absorb higher shipping costs by sourcing additional replacement crude from West African or North American sources, which may result in higher fuel prices. Also, India now imports almost 50% of its crude oil requirements from Russia, and any real secondary sanctions by the Trump admin may also put India under difficult conditions.
Russia: Deepening the Asymmetric Alliance
Minimal Direct Impact: Because Russia is already the most heavily sanctioned economy in the world, the U.S. Treasury has very little remaining financial leverage over Russian state entities.
The Caspian Logistics Loop: The sanctions will accelerate military and economic alignment. Russia and Iran are highly likely to expand their sovereign, unvetted Caspian Sea maritime supply route, allowing them to exchange drone technology, missile parts, and refined products completely outside the reach of Western banking channels.
Shadow Fleet Coordination: Russian and Iranian shipping companies are expected to coordinate their "ghost fleets" to share transshipment tactics, flag-of-convenience switching, and dark-ship AIS operations to move oil to Asian markets.
Switzerland: The Humanitarian Channel Threat
SHTA Disruption: Switzerland hosts the Swiss Humanitarian Trade Arrangement (SHTA), a critical channel approved by the U.S. to ensure food, medicine, and medical devices flow to Iranian civilians.
Compliance Panic: The aggressive focus on digital assets and banking entities creates a chilling effect. Swiss private banks and compliance departments are moving toward a total "de-risking" strategy, freezing legitimate humanitarian transactions out of fear of accidental exposure to newly designated front companies.
Other Nations (The UAE and GCC)
The Dubai Clearing Crackdown: Historically a major trading hub for Iranian re-exports, the United Arab Emirates (UAE) faces intense pressure to clean up its local financial networks. The UAE's recent decision to halt all trade with Iran shows that GCC countries are prioritizing protection of their U.S.-dollar banking clearing systems over regional commerce.
China’s official & unofficial reactions
As of August 25, 2026, China has flatly rejected and openly defied the Trump administration’s newly unveiled “Operation Economic Outcast” secondary sanctions program, ordering its domestic companies to completely ignore Washington's trade restrictions. Following U.S. Treasury Secretary Scott Bessent’s public ultimatum demanding that Beijing "get with the program," China’s ministries issued a series of highly confrontational legal, diplomatic, and economic responses.
The Legal Defense: Activation of the "Blocking Order"
Unprecedented Defiance: In an unprecedented state-backed escalation, China’s Ministry of Commerce officially issued a sweeping directive ordering Chinese companies and state-linked entities to completely disregard U.S. sanctions targeting Iranian oil.
The Legal Shield: The ministry officially invoked its 2021 Anti-Foreign Sanctions "Blocking Statute." This domestic law makes it illegal for Chinese firms to comply with foreign sanctions deemed illegitimate by Beijing, effectively turning the situation into a legal "compliance trap" for entities caught between Washington and Beijing.
Protecting the "Teapots": This legal order specifically blankets China’s independent, regional oil processors—known as "teapot" refineries—which absorb the vast majority of Iran’s crude exports.
Diplomatic Retaliation from China’s Foreign Ministry
"Illegal and Unilateral": At a press briefing in Beijing, Chinese Foreign Ministry spokesperson Lin Jian fiercely criticized the secondary sanctions, labeling them as unlawful, unilateral, and a violation of international law.
Escalation Warning: Lin Jian explicitly warned that the Trump administration's heavy-handed financial pressure "will not help resolve the issue" and will instead intensify regional tensions, damage global economic growth, and threaten international financial stability.
Vow of Countermeasures: The Foreign Ministry concluded with an explicit warning to Washington, declaring that Beijing is closely monitoring developments and will deploy "all necessary measures" to firmly defend the legitimate rights, interests, and economic development of Chinese companies.
Refusal to Halt the Energy Pipeline
Securing Energy Sovereignty: China’s state media and trade officials flatly stated that Beijing does not recognize unilateral U.S. secondary sanctions and will continue its energy trade based strictly on its own national policies/priorities.
The 90% Factor: Chinese trade networks emphasized that because China remains the destination for roughly 90% of Iran's oil exports, any American attempt to cut off these lifelines will be treated as direct economic coercion and an assault on China's domestic energy security.
Shadow over the Looming White House Summit
The Xi-Trump Clash: This high-stakes economic power clash has thrown a severe wrench into upcoming global diplomacy. Chinese President Xi Jinping is still officially scheduled to visit Washington for a pivotal White House summit on September 24, 2026.
The Secondary Tariff Threat: Analysts note that if Bessent's Treasury department aggressively goes forward with removing non-compliant Chinese regional banks from the U.S. dollar system this week, Beijing is prepared to launch major retaliatory curbs—potentially freezing critical mineral (Rare Earth Materials-REMs) exports, especially military-grade, to the U.S.—setting off a full-scale global trade war right before the U.S. midterm elections.
Will Trump blink again?
In brief, although Trump’s secondary sanctions threat on Iran’s trading partners is real and may be difficult in theory, in reality it’s toothless; as the primary target, China has enough systems in place to defy Trump’s bullying tactics. China can also deleverage its REMs dominance to deal with growing US/Trump hegemony.
Trump approval is at record low as support for the Iran war falls—Sanctions to remain the main US action against Iran until after midterms.
As per an AXIOS report, expanded US secondary sanctions are expected to remain Washington’s primary course of action against Iran until at least after the November US congressional midterm elections, when a new military campaign could again be considered. The officials said Iran was struggling to establish alternative routes by land or sea to circumvent the US naval blockade, weakening its ability to provide basic goods and services. One US official said Iran’s economic system was designed to protect the elite, but their purchasing power was also declining. “Some of them—for the first time in their lives—have faced uncertainty about whether their paychecks will arrive on time,” the official told Axios.
Trump is begging for negotiations with Iran and spoke with Pakistan’s army chief last week.
Trump reportedly called Pakistan’s army chief Munir last week ahead of Munir’s visit to Tehran. Trump’s main request was for Pakistan to use its influence to bring Iran back to the negotiation table.
Trump blinked and made an old offer in a new wine bottle to Iran (ahead of China’s President Xi’s September visit to the US).
Al-Arabiya source: Asim Munir is carrying a US offer to Iran to halt the siege and lift sanctions under the Islamabad memorandum of understanding (MOU). The specific U.S. proposal conveyed by Pakistan's Army Chief Munir to Iranian leadership offers to halt the maritime siege and lift economic sanctions in exchange for a complete reopening of the Strait of Hormuz and a total cessation of attacks by Iran-aligned proxies. Details obtained by Al Arabiya English* outline the parameters of this diplomatic mission and the current response from Tehran.
The Core Terms of the U.S. Offer
The U.S. Concessions: Washington has offered to completely dismantle its recently reinforced naval blockade in the Gulf of Oman and roll back primary and secondary economic sanctions. This rollback would halt the impending progression of Treasury Secretary Bessent's strict "Operation Economic Outcast" framework.
The Requirements for Iran: To secure this relief, Iran must guarantee unimpeded, free transit for all commercial shipping vessels through the Strait of Hormuz and order all regional proxy outfits—including the Houthis in Yemen and militias in Iraq—to permanently freeze hostilities.
Reviving the June Accord: Munir explicitly urged Iranian authorities to return to the operational framework of the original Islamabad Memorandum of Understanding (MoU) signed in June. He noted to Iranian officials that both Washington and Tehran bear mutual responsibility for disrupting the initial implementation of the ceasefire.
The High-Stakes Tehran Meetings
Confronting the National Security Council: During his high-stakes visit to Tehran, Field Marshal Munir presented the proposal directly to Mohsen Rezaei, the Secretary of Iran's Supreme National Security Council and direct representative of the Supreme Leader. Regional diplomatic sources characterized the exchange as "clear and decisive."
The Two-Phase "Islamabad Accord": Pakistani mediators are independently pushing a two-tier framework.
Phase one demands an immediate stop to active combat.
Phase two seeks to transition into a broader diplomatic conference hosted directly in Islamabad within 15 to 20 days to settle permanent regional security guarantees.
Iran's Stance and Obstacles to Implementation
Demanding Prior U.S. Compliance: While Iranian President Masoud Pezeshkian reaffirmed that the baseline Islamabad MOU remains the most dignified path forward to prevent eternal war, hardline negotiators remain highly skeptical.
The Ghalibaf Red Line: Iranian Parliament Speaker Ghalibaf heavily emphasized to Munir that the Trump admin must fulfill its financial obligations first. The Iranian delegation insists that the U.S. must execute tangible sanctions relief and release frozen state assets before Tehran rolls back its asymmetric maritime leverage or alters its defensive posture in the Strait.
Conclusions
Trump’s latest offer to Iran is nothing new. Trump is trying to reopen the Strait of Hormuz at any cost before the US midterm election to ensure lower oil, fertilizer, and other commodity prices. But Iran is accustomed to such offers and may not trust Trump’s bluffs further, despite increasing hardships for ordinary Iranians. Iran may continue the war of attrition until at least the Nov. ’26 US midterm election. Trump is trying to change Iran through bullying tactics, something that Iran may not agree with at all.
On early Tuesday, August 25, Trump posted on Truth: The failing Islamic Republic of Iran is not paying large segments of their military, while at the same time killing protesters, even when they are not protesting, at levels not seen before. It is a humanitarian crisis of epic proportions and must be stopped NOW.
Stocks surged, and oil slumped as Trump blinked after launching Operation Economic Fury on Iran.
Oil prices fall after the US Iran sanctions threat stops short of penalties (less hawkish): Oil prices fell after the Trump administration’s “economic D-Day” campaign against Iran stopped short of imposing new penalties. The Trump administration warned countries Monday to cut business ties with Iran or risk secondary sanctions, but the Treasury Department did not announce penalties as part of the move.
Wall Street closed mixed as AI chipmakers slid on the concern of elevated capex and the sustainability of AI circular vendor finance amid volatile bond yields.
Technical outlook: DJ-30, NQ-100, and SPX-500,
Looking ahead, whatever may be the narrative, technically Dow Future (CMP: 53700) now has to sustain over 53900-54000 for a further rally to 54500/54700-54800/55000 and further 55500/56000-58500/59000 in the coming days; otherwise, sustaining below 53800-53700, DJ-30 may fall to 53500*/53200-52800/52500, 51900, and 51300/51000-50500/50200 in the coming days.
Similarly, NQ-100 Future (29350) now has to sustain over 29700-29800 for 30000/30250 and further 30500/30600*-30700/30800 to 31000*, and only above sustaining 31000, it may further surge to 31200/31300-31500*/32000 and even 32400/32500 in the coming days; otherwise, sustaining below 29650, it may fall to 29500/29100-28900.28300*-28100/27800, and it may fall to 27400-27000 and 26600/26300-26000/25600 in the coming days.
Looking at the chart, technically SPX-500 (CMP: 7700) now has to sustain over 7800-7900 for a further rally to 8000/8150-8300/8500 in the coming days; otherwise, sustaining below 7750-7770, SPX-500 may again fall to 7640* and 7550/7500-7300/7200 and 7100-6900 in the coming days.
