Iran

Sept. 4 (UPI) — President Donald Trump on Friday said the Iran war was “small potatoes” and “not a big thing.”

Trump was responding to questions about comments by Vice President J.D. Vance, who had said a day earlier that the conflict wasn’t a war.

“A lot of people don’t call it a war,” Trump told reporters. “I call it a military conflict because it’s small potatoes for us.

“It’s not a big thing. We did Venezuela, and we did this.”

Trump described the war as intermittent and a flare-up, USA Today reported.

Hours earlier, on his Truth Social platform, Trump explicitly called the conflict “the War in Iran.”

“The Radical Left Lunatics, Dumocrats, and Communists would rather have us LOSE the War in Iran, than have President Donald J. Trump WIN the War for America,” he wrote early Friday afternoon.

A day earlier, Vance told reporters there had been “no active shooting” and downplayed the severity of the war.

“I wouldn’t call it a war,” Vance told reporters at the White House.

Trump agreed with his vice president.

“I would say it’s a military conflict, if you want,” Trump said on Friday. “I don’t think it matters what you call it.

“What matters is the fact that we have had tremendous success.”

WASHINGTON — Vice President JD Vance rejected the use of the word “war” to describe the U.S. fighting with Iran as he steered clear of predicting that the six-month-old conflict would be over by November’s midterm elections, in which Republicans are trying to hang on to their narrow majorities in Congress.

“I wouldn’t call it a war,” Vance said Thursday after being asked during a White House press briefing about whether the fighting could end before voters cast their ballots in the Nov. 3 congressional elections. “Right now, there is no active shooting.”

Vance’s assertion came even as Iran fired at U.S. Gulf ally Kuwait on Thursday as it continued to retaliate for rounds of U.S. strikes on Iran earlier in the week.

The vice president said the U.S. had a “responsibility” to carry out this week’s strikes because Iran continued to target commercial vessels passing through the Strait of Hormuz.

Vance’s attempt to minimize the intensity of the fighting illuminates the difficult task at hand for Trump and his administration as he tries to persuade American voters to keep Republicans in control of Congress, even as the unpopular conflict — one the White House said at its outset would last a matter of weeks — has driven up gas prices and left consumers grappling with higher inflation.

Vance said he didn’t want to set “artificial timelines.”

“But when you ask, ‘When will this end?’ You’re asking me a question like, ‘When will the Iranians stop shooting at ships?’” Vance said. “I think the reality is, I don’t know the answer to that question. You would have to ask the Iranians.”

The administration in July faced scrutiny after it reclassified four fallen soldiers as well as dozens of wounded troops in its Defense Casualty Analysis System, which Pentagon officials have repeatedly pointed to as the definitive source on the numbers of dead and wounded from the conflict. Those killed or wounded in fighting after a brief ceasefire between the U.S. and Iran fell apart were classified in a new category called “Overseas Operations” after initially being tallied in the totals from the war.

White House insists more oil is getting out of Gulf, but prices remain high

Brent crude prices hovered above $95 per barrel Thursday. The international benchmark was around $72 per barrel the day before the conflict began.

Still, Trump and his aides have sought to push that the U.S. Navy is in control of the Strait of Hormuz, where about 20% of the world’s traded oil passed before the war. They insist a near prewar level of Gulf oil is now making its way out of the critical waterway.

Vance at Thursday’s press briefing said the U.S. escorted about 15 million barrels of oil on Wednesday. This was after Energy Secretary Chris Wright told CNBC on Wednesday that 17 million barrels were carried through the strait on Monday with assistance from the U.S. Navy. About 20 million barrels of Gulf oil flowed through the strait prior to the start of the war.

But ship traffic through the strait remains well below prewar levels, according to independent firms that track marine traffic.

There were 102 transits last week and 126 the week before, according to shipping data company Lloyd’s List Intelligence, compared with 130 or more per day before the war.

Over the past 28 days, 5 million barrels a day have exited the strait on average, according to TankerTrackers.com. Other recent estimates have varied from 2 million barrels per day to 6 million barrels per day.

Trump has tried to soothe volatile markets

Over the course of the war, Trump has repeatedly reported progress in negotiations or called off threats of military action at the last moment when global markets have become jittery. And markets have reacted swiftly to his public signals of peace or hints of progress.

“The administration is still jawboning oil markets,” said Rosemary Kelanic, Middle East director at Defense Priorities, of the administration’s claims of dramatically increased flows of oil. “And they appear to be doing it again to keep prices from going too high, so that they can extend the timeline before there’s a worse price spike.”

With Iran’s refusal to back down in the face of the U.S. military campaign, Trump has settled on a dual-prong approach that combines economic pressure with threats of an escalation in force, if necessary.

Trump has consistently emphasized that the campaign launched by the U.S. and Israel has been devastating for Iran’s navy and air force. Iranian officials have said the country has suffered $270 billion in direct and indirect damage. Israeli military strikes in the first weeks of the war wiped out much of the theocratic government’s leadership structure, including its Supreme Leader Ayatollah Ali Khamenei.

Still, Iran has found leverage through its own strikes on the strait and Gulf allies of the United States. But the administration has sought to make the case that the waterway will become less important by the day, even as it asserts that more oil is getting through.

Treasury Secretary Scott Bessent said in a Fox Business interview this week that the Strait of Hormuz will become a “worthless piece of water” within two years as new land pipelines planned for the region bypass the energy chokepoint. Trump himself took to social media on Thursday to highlight a news report about Syria’s effort to transform the port of Baniyas on the Mediterranean coast into a westward route to international markets for Gulf exporters.

Meanwhile, Iran and Oman have recently discussed a phased approach to jointly managing ship traffic through the Strait of Hormuz.

Trump settles into holding pattern before midterms, analysts say

The administration maintains it’s making progress economically choking off Iranian hard-liners, including the powerful Islamic Revolutionary Guard Corps. At the moment, it would be a leap for Trump to agree to any plan that puts Iran in position to claim control of the strait, analysts say.

“I find it hard to believe the president would agree to anything that hands back any modicum of IRGC control over the strait that has been wrested away,” said Richard Goldberg, who served as a senior adviser on Iran policy in Trump’s first administration.

Aaron David Miller, a senior fellow at the Carnegie Endowment for International Peace, said Iran does not appear ready to “let Trump out of the box” despite the massive pain being inflicted on its economy.

At the same time, Miller said, Trump seems to have settled into a holding pattern ahead of the midterms — one in which he avoids both a return to the full-throttle bombardment of Iran and making any accommodations to Tehran on the Strait of Hormuz.

“The White House doesn’t want a massive war, and they don’t want to be seen as offering massive concessions,” Miller said. “The tack they are taking avoids both of those things.”

Madhani writes for the Associated Press. AP writers Jonathan J. Cooper and Josh Boak in Washington and David McHugh in Frankfurt, Germany, contributed to this report.

China is buying ninety percent of Iran’s oil exports, settling transactions in renminbi, and hiding the rest beneath layers of shell companies. This is not defiance. It is a demonstration, conducted in plain sight, of exactly how far American economic reach actually extends.

Scott Bessent promised, when he launched Operation Economic Outcast last week, that no one would be above the reach of US sanctions. China’s foreign ministry responded by saying Beijing would do everything necessary to safeguard its own rights and interests. That exchange, watched by the rest of the world, is not really about Iran. It is about whether the threat of American secondary sanctions can force a country that has already fought several trade wars with Washington to a standstill into changing its economic behaviour. The answer, which China has been demonstrating methodically for months, is no.

How China Made Itself Immune to US Secondary Sanctions

The architecture of Chinese-Iranian trade has been specifically designed to sit outside dollar-system jurisdiction. Chinese banks and companies that buy Iranian oil settle transactions in renminbi or through barter arrangements, making them effectively immune to American extraterritorial authority. The handful of Chinese entities that still touch dollar-denominated transactions do so through shell companies that can be discarded and replaced faster than Washington can identify and sanction them. The result is the regulatory whack-a-mole problem that American Treasury officials privately acknowledge, eliminate one entity, and three more appear in its place, each more obscured than the last.

Washington could escalate by sanctioning major Chinese banks and companies that have no Iran ties at all, using them as leverage to pressure Beijing to rein in those that do. That option exists on paper. In practice, it would constitute a declaration of economic war against China’s financial system at a moment when the US economy is already strained by six months of conflict with Iran, oil prices are elevated, and midterm elections are eight weeks away. The Trump administration knows this, which is why Bessent’s ultimatum came with no major Chinese institution on the sanctions list. The threat was real. The enforcement mechanism was not.

What a US Victory in Iran Would Cost Beijing

China sources roughly forty percent of its oil imports from the Gulf, with Iran accounting for ten percent of that total. If the US wins this war convincingly, meaning Iran’s government collapses or capitulates and Washington reinstalls itself as the dominant security guarantor across the Gulf, the energy architecture that China has spent two decades building becomes dependent on American goodwill. Every barrel of Gulf oil that China buys would effectively pass through a security framework Washington controls.

The regional knock-on effects compound that problem. The Mecca pact between Saudi Arabia, Turkey and Pakistan, the SCO’s deepening trade and financial architecture, the China-brokered Saudi-Iran normalisation of 2023: all of these represent years of Chinese diplomatic investment in a Middle East that is gradually reducing its security dependence on the United States. An Iranian defeat that pushes regional states back under the American umbrella undoes that investment at a stroke. From Beijing’s perspective, the cost of buying Iranian oil at a discount and absorbing American secondary sanctions is considerably lower than the cost of losing the regional influence that Iran’s survival helps sustain.

Neither Ally Nor Bystander

The SCO summit in Bishkek last week illustrated Beijing’s position with more precision than any official statement. Xi met Putin and Modi bilaterally. Iran’s President Pezeshkian attended the summit and held consultations at foreign minister level. He was not invited to Beijing. He did not get a Xi bilateral. That calibrated distance is deliberate, and it reflects a Chinese calculation that is more sophisticated than either alliance or abandonment.

Beijing does not want Iran to lose. It also does not want Iran to win so completely that Tehran’s regional hegemony destabilises the Gulf relationships China has been cultivating. The Chinese position, buying Iranian oil, refusing to arm Iran, keeping diplomatic engagement at arm’s length, is designed to keep Iran functional without making China responsible for Iranian behaviour. It is the foreign policy equivalent of keeping a fire burning without touching it.

Xi’s scheduled visit to Washington later this month, coming directly after the Bishkek summit, reinforces this reading. Beijing is simultaneously demonstrating to Iran that it has economic backing and demonstrating to Washington that it has strategic restraint. Both demonstrations serve Chinese interests. Neither requires China to choose a side.

Five Things Worth Watching

• Whether Xi’s Washington visit produces any concrete understanding on Iran-related secondary sanctions. If the two sides agree on a framework that gives China cover to quietly reduce Iranian oil purchases over time, the sanctions architecture gains traction it currently lacks. If the summit produces only standard language about constructive competition, Operation Economic Outcast’s China problem remains unresolved.
• The SCO Development Bank’s progress toward implementation. If the bank moves from agreement to operational institution in the coming months, it creates dollar-independent financing infrastructure that makes secondary sanctions significantly less effective not just for China-Iran trade but for the broader Eurasian trade network the SCO is building.
• Whether any Chinese entity on the August sanctions list is large enough that its designation produces real disruption rather than being absorbed and routed around. The signal from August’s first wave was that Washington sanctioned deliberately small targets. The size and visibility of the next wave’s targets will tell you how seriously Washington is willing to press China.
• India’s position on renminbi settlement for its own Iranian oil purchases. If Delhi follows Beijing’s approach and expands non-dollar settlement for energy trade, the secondary sanctions architecture faces a second major exemption that Washington is even less able to address given how carefully it has been courting India.
• Iran’s currency trajectory. The rial has hit record lows despite Chinese oil purchases continuing. If the currency continues to deteriorate even with Chinese demand stable, it suggests Operation Economic Outcast is landing on Iran’s non-oil economy in ways that the Chinese lifeline cannot fully offset which changes the pressure calculus regardless of whether Beijing complies.

The Bottom Line

Washington designed Operation Economic Outcast to isolate Iran. What it has demonstrated is the outer boundary of American economic jurisdiction in a world where China has spent a decade building the infrastructure to sit outside it. Renminbi settlement, dark fleet shipping, teapot refineries, shell company networks, these are not improvised workarounds. They are a parallel financial architecture, constructed precisely for this contingency, and it works well enough to keep Iranian oil flowing at volumes Washington cannot stop.

The deeper problem for the Trump administration is not that China is defying its sanctions. It is that China is proving, transaction by transaction, that the sanctions cannot be enforced against a country of sufficient size and sufficient preparation. That demonstration has an audience well beyond Beijing and Tehran. Every country currently watching whether to comply with American secondary sanctions is learning the same lesson: the reach of US economic power has a ceiling, and China has found it.

As the United States and Iran exchanged attacks this week, one date was increasingly looming over the conflict.

The US midterm elections on November 3 could prove a pivotal moment in the war, as senior advisers to President Donald Trump seek to prevent the conflict from returning to all-out war before the polls when Republicans will be defending narrow majorities in both houses of Congress.

The push for restraint comes as Washington turns to economic pressure on Iran instead of military force. In August, the Trump administration announced its so-called “Economic D-Day”, imposing sanctions on 60 entities that it says facilitate oil revenues for trade with Iran and threatening other countries doing business with Tehran with secondary sanctions.

At the same time, the US naval blockade of Iranian ports in and around the Strait of Hormuz continues to exert pressure on Tehran’s oil exports.

Vice President JD Vance has meanwhile sought to downplay the war, which the US and Israel launched with attacks on Iran on February 28, as rising fuel prices and public opposition in the US threaten to become political liabilities for Republicans before the vote.

But there are clear limits to the restraint the Trump administration can show, with US forces continuing to strike Iran in recent days, and US leaders insist that further military action remains an option. Vance said this week that “everything that could happen is on the table,” including economic, military, diplomatic and covert pressure.

That leaves the coming two months as a particularly tricky period to navigate. Washington will want to avoid an all-out war while ratcheting up economic pressure, but Iran has its own calculations and could respond militarily anyway, potentially forcing the US into an escalation it would rather avoid before Americans go to the polls.

Here’s what we know.

Why do the midterms matter for Trump?

The midterms will determine whether the Republican Party can retain its narrow control of Congress. If the war escalates again before then, that could persuade more people to vote against the Trump administration.

Containing the fighting until November, therefore, may help prevent an already deeply unpopular war from dominating the political agenda.

A late-August Reuters/Ipsos poll suggested that just 31 percent of Americans support the war, compared with 63 percent who oppose it. Trump’s approval rating has also fallen since the outbreak of hostilities, from 40 percent to 33 percent, according to Reuters/Ipsos polling.

Observers say the Trump administration did not expect things to get to this point.

In early March, Trump insisted the war would last for “four or five weeks”. Instead, the conflict has dragged on, and unexpected consequences – including Iran’s closure of the Strait of Hormuz causing energy prices to spike – have made it even more unpopular with US households.

US diesel prices hit a record high on Thursday, surpassing the previous peak recorded in 2022, as higher crude oil prices and refining bottlenecks drove up the cost of a fuel that underpins much of the US economy.

That is particularly damaging for a president who campaigned partly on a promise to dramatically reduce energy costs – as well as not to get involved in “unnecessary” wars.

The fallout from the war has not stopped at the petrol pump. Sustained increases in fuel and transport costs feed into the price of groceries, manufactured goods and other everyday purchases – potentially worsening inflation when Democrats are making the cost of living a defining issue for the midterm campaign.

A Politico poll conducted in August suggested that 61 percent of Americans believe the Iran war had made life more expensive for their families, four percentage points higher than a month earlier.

Can Trump keep the war contained until November?

There are signs that his administration is trying to do exactly that.

In recent weeks, Washington has intensified its campaign to economically isolate Iran, threatening severe sanctions against countries that continue trading with it while maintaining military pressure around the Strait of Hormuz.

With strikes on Iran earlier this week, Trump has also indicated he is willing to engage in sporadic attacks, while trying to keep the war from escalating back to all-out conflict.

Senior administration officials have simultaneously sought to play down the scale of the military confrontation. Asked at a White House briefing whether the Iran war would be resolved before the midterm elections, Vice President JD Vance said he “wouldn’t call it a war” and claimed there was “no active shooting right now”.

Asked when Iran would stop attacking commercial shipping, Vance said: “You would have to ask the Iranians.” He also said the conflict was having “less effect day by day” on global energy markets. The US claims it is escorting about 30 ships per night through the Strait of Hormuz – and officials claimed some 18 million barrels of oil were transported through on Tuesday this week. However, shipping data does not appear to fully support this claim.

Trying to maintain a strategy of “no war, no peace” with sporadic attacks is high-risk, analysts have warned. Negar Mortazavi, senior fellow at the Washington, DC-based Center for International Policy, told Al Jazeera this week: “Tehran will not capitulate under [economic] pressure. Both sides may believe they can control the escalation, but every new exchange increases the risk of a wider regional conflict.”

One of the US attacks this week is also believed to have hit a civilian home where a wedding was taking place in Kuhestak, southern Iran, killing at least four people, including children, and wounding dozens.

Furthermore, The Washington Post reported on Sunday that senior Army, Navy and Air Force leaders have warned Pentagon chief Pete Hegseth in a written assessment that continuing the war at its current pace is unsustainable and risks undermining US military readiness in other parts of the world.

Trita Parsi, executive vice president of the US-based Quincy Institute for Responsible Statecraft, told Al Jazeera that this week’s attacks point to a US strategy that remains deeply unsettled.

“I think it’s quite likely that what we’re seeing right now is just complete military, strategic disarray on the American position in which the positions, the actions, the tactics, the strategies keep on getting changed,” Parsi said.

Washington had imposed sweeping economic sanctions on Iran in an apparent attempt to make further military intervention unnecessary, he noted. “Seven days later, the US is back into bombing Iran.”

The US appears to be “jumping from one position to the other”, he added.

What are Iran’s calculations?

While the most recent attacks between the US and Iran have been less intense than the heavy exchanges seen in the early weeks of the war and during the two flare-ups in July, the risk of escalation is high. And it may be in Iran’s interests for that to happen sooner rather than later.

Iran has excelled at the use of asymmetric warfare against an enemy with considerable military might – using cheap, mass-produced drones to exhaust US supplies of very expensive defensive systems, and launching attacks on US allies around the Gulf, sowing disharmony.

In particular, Tehran has demonstrated that it can severely disrupt maritime traffic through the Strait of Hormuz, causing global economic consequences.

Continued Iranian attacks on US or regional military assets, shipping or energy infrastructure would place pressure on Washington to retaliate more strongly than via the few attacks it has carried out this week, creating the possibility of an escalatory cycle that could return the two countries to a much wider war regardless of the White House’s electoral calculations.

Furthermore, Washington’s economic strategy to isolate Tehran – an attempt to move away from open warfare – may in fact create a greater Iranian incentive to retaliate.

Parsi told Al Jazeera that Iranian officials appear to believe Trump ultimately intends to restart the war on a larger scale but is just waiting until after the midterms.

That creates a potentially dangerous calculation for Tehran, where it is better to escalate now – while Trump is at his most politically vulnerable. “The reaction of the Iranians to that might be to actually trigger the war themselves early right before the midterm elections in order to maximise the pain that will impose on the US president,” Parsi said.

What happens after November?

Reuters reported on Wednesday that senior White House officials are already considering whether to intensify military operations against Iran after the November 3 vote, although no decision has been made on returning to full-scale conflict, it reported.

A Republican victory in the midterms could give Trump greater political room for this option, particularly if the administration interprets the result as approval – or at least lack of enough disapproval – for the war despite the economic consequences for voters.

A Republican defeat presents a more complicated picture, however. On the one hand, losing one or both chambers of Congress will constrain the administration, as Congress controls government funding. Democratic control of the House or Senate would also give Trump’s opponents greater scope to hold hearings, investigate the US conduct of the war and challenge requests for additional military spending.

Conversely, with Trump no longer facing a congressional election, he may feel less pressure to contain the war, experts fear.

Parsi warned that an electoral defeat could therefore have the opposite effect to what Tehran might expect.

“I’m not so sure that it’s going to pay off necessarily for the Iranians because a Trump that is humiliated at the elections, who is faced with a Democratic [majority] House [of Representatives] and potentially a Democratic Senate, may also become a much more desperate and reckless president,” he said.

Critics argue that the administration’s arcade games prioritise entertainment over pressing issues like rising costs and foreign conflicts.

The White House’s unveiling of five arcade-style games on its website, each believed to be promoting a different policy of United States President Donald Trump’s agenda, has ignited backlash, with critics accusing the administration of prioritising entertainment over addressing rising living costs and the ongoing war on Iran.

Announced on Thursday, the games include “Build the Wall” where players run to capture little green figures before they reach a border wall; “Rio Run”, a Snake-style game in which players gather border crossers along a fence; “Supply Line”, in which players reject food items that fail to meet “Make America Healthy Again” standards; “Flappy Bill,” a Flappy Bird-style game in which a bald eagle carries legislation over the National Mall; and “Trump Savings Tycoon”, in which players catch flying cash and gold bars to “fill your kids’ Trump Accounts,” in reference to the administration’s child savings programme.

“Heating oil is near an all-time high but hey you can play Border Czar Tom Homan in a video game,” Senator Matt Lesser wrote on X.

Rights groups have also criticised the administration for the gaming website.

“Makes me sick. They’ve been playing games with people’s lives for years, now they’ve made a video game of what they’re doing,” Amerika Garcia Grewal, co-director of the Frontera Federation in Eagle Pass, Texas, told AFP news agency.

The game designers “have lost touch with what it means to be human and care for others”.

Adriana Jasso, programme coordinator for AMIGOS San Diego Community, who works at the border, said the arcade-style games showed a fundamental “lack of seriousness” from the administration.

“The cruelty, the extremity of the administration … is no longer surprising,” she said.

In recent months, Trump has faced mounting criticism over the economic toll of the war on Iran and his broader domestic agenda.

The conflict has kept the Strait of Hormuz closed for nearly six months, disrupting global supplies of oil and natural gas and fertiliser, and pushing US inflation above the Federal Reserve’s 2-percent target, according to reporting by Texas Public Radio.

Trump has also faced criticism over tariff policies that the Supreme Court partly struck down earlier this year, along with cuts to food assistance programmes and the expiration of Affordable Care Act tax credits, all of which economists say have compounded the squeeze on household budgets.

The White House, meanwhile, appeared unfazed, posting “CAN’T STOP WINNING” on X alongside a link to the games.

WASHINGTON — Confronted by an intransigent Iranian government that has refused to back down in the face of a massive military campaign, President Trump appears to have settled on a dual-prong approach that combines economic pressure with the potential of a devastating escalation in force.

Having launched “Operation Economic Outcast” just last week to try to isolate Iran from its remaining global trade partners, the Trump administration also resumed strikes in recent days, prompting Iranian retaliation that has renewed concerns of an all-out regional war.

However, the combination of already intense sanctions on Iran and an off-and-on bombing campaign since the war began more than six months ago has not bowed the Iranian leadership and has left the administration struggling to find a way to wind down the conflict. Tehran has dug in its heels — to Trump’s frustration — as energy prices rise, the global economy roils and poll numbers on the administration’s handling of the war dip ahead of November’s midterm congressional elections.

Trump said Wednesday that he didn’t think the conflict would last “much longer,” but he again shrugged off suggestions that its unpopularity and high gasoline prices resulting from Iran’s chokehold on the Strait of Hormuz would affect the elections for Republicans.

“It doesn’t matter. And I’m not affected by the election,” he told reporters. “I’m not running. But my party is running, and I’m going to help my party. But I think my party respects the fact that we’re not allowing Iran to have a nuclear weapon.”

A regional diplomat briefed on the matter described the current impasse between Tehran and Washington as reflective of both countries’ domestic priorities: the midterm elections for Trump and Republicans and the internal crises within Iran.

Domestic issues are critical reasons why neither side is willing to blink first, said the diplomat, who spoke on condition of anonymity to discuss sensitive negotiations.

The diplomat said negotiations, including those between Iran and Oman or even Iran and the U.S., will not go anywhere without addressing the initial catalyst of war: Israel. And the diplomat was skeptical of the Trump administration’s new sanctions plan, saying the threats require more explanation than what the U.S. has provided so far.

The Trump administration’s economic isolation of Iran is off to a slow start

The administration’s new push for Iran’s economic isolation was announced with great fanfare last week and a dire warning for all remaining countries to cut off financial and trade ties with Iran or face U.S. retaliation — but the campaign so far has fallen flat.

Just one branch of an Egyptian bank in the United Arab Emirates has been targeted so far. For actual sanctions to bite, experts agree that they must apply to Iran’s main trading partners: mainly China but also India and Russia. But Trump is loath to target China especially as he is preparing to host President Xi Jinping later this month.

Trump also insists that the U.S. has control over the Strait of Hormuz, where one-fifth of the world’s oil transited before the war began. The strategic waterway has been a key pressure point for Iran, and reopening it fully has become one of the prime goals for the U.S. administration.

Ship traffic through the strait is well below pre-war levels due to the risk of attack if vessels don’t comply with an Iranian vetting regime near its coastline, which is in sharp contrast to the unhindered navigation before the war. There were 102 transits last week and 126 the week before, according to shipping data company Lloyd’s List Intelligence, compared with 130 or more per day before the war.

“As President Trump said, the strait is open and all mines have been cleared,” White House spokeswoman Anna Kelly said Thursday. “The naval blockade remains in full force and effect, and Operation Economic Outcast is underway to sever every remaining economic lifeline sustaining the regime.”

The White House has repeatedly touted the economic impact that the sanctions have had on Iran, citing its rampant inflation and the massive loss in the value of its currency. U.S. officials have described Iran’s financial system as “one big house of cards.”

Going forward, Secretary of State Marco Rubio said “the price” Iran will pay will be primarily economic, “but we reserve the right … to take military action when necessary — not just to protect ourselves but to prevent them from being able to threaten others as well.”

“They’re going to continue to feel the squeeze,” he told Fox News host Brian Kilmeade in an interview that aired Wednesday.

Treasury Secretary Scott Bessent this week likened Iran to a snake that has been decapitated but whose body is still writhing.

“We are burying the head of the Iranian snake,” he said Tuesday. “The snake doesn’t know it’s dead yet, but it will stop wiggling when the sun goes down. And so the Iranian regime — they are in demise, and they will figure it out.”

Combining military force and sanctions on Iran ‘is the only option,’ one analyst says

Complicating things for the U.S., Iran’s leadership has shown signs of divisions between moderates more open to a diplomatic solution and hardliners who want to press ahead with a more confrontational approach.

President Masoud Pezeshkian is one of the most prominent voices still calling for a negotiated solution. But the hardliners appear to have gained the upper hand, and Iran shows no sign of backing down. Tehran continues to lash out at U.S. interests and allies around the region in response to military strikes.

“This kind of a hybrid approach — the combination of military force, blockade and economic pressure — that is the only option that seems to be available to the United States at this moment,” said Hamidreza Azizi, consulting senior Iran analyst for the International Crisis Group.

Still, he said, “it’s been for a long time, but now maybe more than ever, a battle of endurance between the two sides.”

Amr Hamzawy, director of the Middle East program at the Carnegie Endowment for International Peace, pointed to two main reasons for the deteriorating situation.

“One, none of the two parties is satisfied with the outcome — meaning that the current situation does not serve U.S. interests well, and it does not serve Iranian interests well,” Hamzawy said.

The other reason is how leaders from both sides are perceived at home.

“The Trump administration is afraid of being portrayed in the U.S. as an administration that failed to end a military campaign successfully, and that’s going to impact the midterm elections,” he said. “And the Iranians, especially the Revolutionary Guard, are quite afraid of appearing as if they are submitting to U.S. sanctions with no actions on their side, which might hurt them domestically.”

Lee, Magdy and Amiri write for the Associated Press. Magdy reported from Cairo. AP writers Will Weissert in Washington and David McHugh in Frankfurt, Germany, contributed to this report.

The United States and Iran continue to make competing claims about who has greater control of the critical Strait of Hormuz in the Gulf.

Washington claims the strait is open and that dozens of ships, carrying millions of barrels of oil, are passing through each day. US President Donald Trump claimed last month that the US was in “total control” of the waterway, through which one-fifth of the world’s oil and gas is shipped during peacetime, but which has been closed since the US-Israel war on Iran began six months ago.

Iran, however, says the strait remains under its control and is closed except to pre-approved vessels using its designated channels. It has warned that other ships attempting to transit risk being targeted.

So what is really going on in the strait – and what explains the divergent accounts?

What are the latest US claims about the Strait of Hormuz?

The US says shipping through the Strait of Hormuz has significantly increased in recent weeks.

Two US officials told CNN that 40 commercial ships carrying some 18 million barrels of oil passed through the strait under US military escort on Tuesday, in what would be a new wartime record.

Trump gave a similar figure on Monday, saying the US Navy was helping some 30 ships pass through Hormuz every night. He later said the waterway was “under USA control”.

In terms of oil, US Treasury Secretary Scott Bessent said that “at least 10 million barrels” were getting through the strait each day, with between 15 million and 17 million on Tuesday.

The assessment comes after US CENTCOM commander Brad Cooper claimed last week that the US military had cleared Hormuz’s transit lanes of sea mines.

Before the war began, an average of around 100 ships and 20 million barrels of oil are estimated to have passed through the waterway each day.

According to figures from PortWatch, this has fallen to an overall average of seven vessels since March.

What does Iran claim about the strait?

Iran has acknowledged that some vessels are getting through the strait, but insists it remains in control of the waterway.

Iran’s Parliament Speaker Mohammad Bagher Ghalibaf on Tuesday said “the enemy managed to get some ships” through Hormuz, but stressed that Iranian forces remain “in complete control of the strait and will not allow it to be opened”.

Ghalibaf accused the US of giving ships “false guarantees” about their ability to cross a southern route in Hormuz, warning that ships that try to do so would be targeted.

The following day, Iran’s Islamic Revolutionary Guard Corps (IRGC) claimed two oil tankers had hit mines and were disabled while trying to cross an “illegal route” in the strait. Saudi Arabia, meanwhile, claimed an Iranian attack hit a Saudi oil tanker, killing two Filipino sailors.

What does shipping data show?

The latest ship-tracking data paints a different picture than the US claims, with far fewer vessels recorded as transiting the strait.

According to marine analytics firm Kpler, just six vessels crossed the strait on Wednesday, 11 on Tuesday and five on Monday. It put the 10-day average at 13 vessels per day.

Other ship-trafficking services show a similar pattern. Maritime data firm Lloyd’s List Intelligence recorded an average of around 12 transits per day from August 26 to September 1, though the latest data may be incomplete “due to a lag in identifying dark transits”, said the firm’s maritime intelligence and research director, Bridget Diakun. This means that some ships are switching off their tracking beacons.

From August 17-23, Lloyd’s List Intelligence recorded “about 14 non-Iranian-linked ships each day”, Diakun told Al Jazeera.

All these figures are far lower than the US claim that 40 ships transited the strait on Tuesday.

The Joint Maritime Information Center (JMIC), which monitors threats to shipping in the region, said in a September 1 advisory that commercial traffic through Hormuz was “far below baseline”, despite a “modest uptick from recent lows”.

The advisory put the risk level for Hormuz at “severe”, citing a “continued risk of drifting or uncharted mines”, despite US claims to have cleared the strait of mines.

What explains the discrepancy?

Diakun told Al Jazeera that it is difficult to explain the gap between US-claimed transit figures and those recorded by ship trackers without insight into how the US tallies its own figures.

She said it’s possible the US includes smaller or non-cargo-carrying ships in its total, unlike Lloyd’s, which only counts “cargo-carrying vessels over 10,000 dwt [deadweight tonnage]”.

Eirik Hooper, a senior associate covering the ports and terminals sector for maritime research consultancy Drewry, also pointed to possible differences in how the US counts vessel transits.

“A US operational count plausibly includes everything that moved under or near naval protection: naval auxiliaries, offshore support and tugs, coastal and small craft [and] dhows,” said Hooper, noting that ship-tracking firm Kpler filters out such vessels “on size or cargo grounds”.

Hooper also said the US has access to “satellite, airborne and other sensor coverage plus its own convoy manifests”, which enables it to see vessels not immediately picked up by the normal automatic identification system (AIS) tracking system.

“By late August, the majority of Hormuz crossings were classified ‘dark’ or unknown by route, and AIS data counts often need to be revised to include vessels that switch off their transponders, with confirmed movements backdated,” said Hooper.

More generally, both the US and Iran have an incentive to play up their influence in the strait, the status of which has become a major sticking point in their six-month conflict.

Former US Ambassador Henry Ensher recently told Al Jazeera that he believes the latest cycle of US-Iran confrontation was likely triggered by CENTCOM’s claims to have de-mined that strait, and said “both sides would be well served to stop talking quite so much”.

The Iran conflict and disruption to the Strait of Hormuz are forcing major oil importing countries to rethink how they source crude. Countries that once relied heavily on nearby Middle Eastern suppliers are increasingly turning to producers in the Americas and Africa, accepting longer voyages and higher shipping costs in exchange for greater energy security.

Japan Diversifies Its Oil Supplies

Japan is among the clearest examples of this shift. Before the conflict, more than 90% of its crude came from the Middle East, benefiting from short and relatively inexpensive shipping routes.

Since Gulf exports were disrupted, Japanese imports from the United States have surged. Between March and June, Japan imported more than 4.5 million metric tons of US crude, compared with less than 1 million tons during the same period in 2025.

The alternative comes with a cost. US crude takes roughly nine days longer to reach Japan, increasing freight expenses and requiring refiners to adjust their delivery schedules.

Asia Looks Beyond the Middle East

Japan is not alone. South Korea and India are also increasing purchases from suppliers in the Americas and Africa as Middle Eastern shipments decline.

China, the world’s largest crude importer, has relied heavily on strategic reserves to cushion the impact of the conflict. As those reserves are drawn down, Chinese buyers could return to international markets and intensify competition for crude from alternative producers.

The Americas Emerge as Major Suppliers

The disruption has created a major opportunity for oil exporters outside the Middle East.

US crude exports reached a record 61.6 million metric tons in the second quarter of 2026, up 43% from a year earlier. Brazil, Argentina and Guyana have also recorded strong export growth.

Brazilian shipments to India, for example, were three times higher in the first half of 2026 than during the same period in 2025.

Longer Routes, Higher Costs

The new trade patterns are considerably less efficient.

A tanker travelling from major Gulf terminals to India’s western coast can take only three to five days. A shipment from Brazil to the same destination can take around 25 days.

Longer journeys mean higher tanker demand, greater freight costs and more complicated logistics. Yet importers are increasingly willing to absorb those costs because dependence on a single vulnerable supply corridor carries its own risks.

Avoiding Strategic Chokepoints

The shift is also about reducing exposure to vulnerable maritime routes.

The Strait of Hormuz remains a major risk, while geopolitical tensions have reduced traffic through the Suez Canal. Drought has also constrained the Panama Canal.

As a result, importers are increasingly valuing suppliers whose shipping routes can bypass these chokepoints.

A New Global Energy Map

The emerging pattern is creating a more geographically dispersed oil market.

Middle Eastern producers will remain crucial because of their enormous reserves, low production costs and established infrastructure. But Asian buyers are unlikely to forget the disruption caused by the Hormuz crisis.

Regular purchases from new suppliers can therefore become a form of insurance, even after Gulf exports recover.

Analysis

The most important change is that energy security is beginning to outweigh pure economic efficiency.

For decades, Asian refiners benefited from buying Middle Eastern crude because geography made it cheaper and faster. The Iran conflict has exposed the vulnerability of that model. A short shipping route is of limited value if a single geopolitical crisis can disrupt it.

The result could be a lasting diversification of global oil trade. Importers are unlikely to completely abandon Middle Eastern crude, but they may maintain larger relationships with US, Latin American and African suppliers to create alternative sources of supply.

This means the cost of energy security will increasingly be reflected in the global oil market. Longer voyages, higher freight rates and more complex supply chains may become the price importers are willing to pay for resilience.

The broader shift is therefore from an oil market designed primarily around efficiency to one increasingly designed around redundancy and geopolitical risk.

With information from Reuters.

China has long been a rare partner to Iran, with the economic heft to blunt the United States’ efforts to strangle the Iranian economy.

Yet even as China opposes US President Donald Trump’s latest pressure campaign, few observers expect it to go much further than the modest economic links it has thus far forged with Iran to shield it.

While China opposes the Trump administration’s military attacks and sanctions against Iran, Beijing’s relationship with Tehran is just one consideration in a foreign policy that seeks to balance relations with numerous countries, including the US and the Gulf states, limiting its appetite to prop up the Iranian leadership at any cost, analysts say.

“China, with broader global interests, can only actively promote de-escalation of the US-Iran conflict, and cannot and will not engage in fierce confrontation with the US for Iran’s sake,” said Hongda Fan, director of the China-Middle East Center at Shaoxing University in China.

“Ultimately, the US-Iran conflict must be resolved by the two countries themselves,” Fan said.

China and Iran share substantial trade links, particularly in energy, and a mutual suspicion of US dominance, but their relationship is heavily lopsided, with Tehran depending on Beijing far more than vice versa.

That asymmetry in ties was on full display this week at the annual gathering of the Shanghai Cooperation Organisation, a 10-member bloc widely seen as a counterbalance to US hegemony, where Chinese President Xi Jinping joined more than a dozen non-Western leaders, including Iranian President Masoud Pezeshkian.

While Iranian state media reported that Pezeshkian held a “brief meeting” with Xi on the sidelines of the summit in Bishkek, Kyrgyzstan, Chinese outlets made no mention of the encounter.

Xi immediately followed his attendance at the summit with his first visit to Egypt in a decade on Tuesday, using the visit to call on countries in the Middle East to oppose “external interference” and reiterate his calls for a diplomatic resolution to the Iran war.

As Iran’s top trade partner, China has taken up to 90 percent of Iranian oil exports since the US and Israel launched their war in late February.

Iranian crude, however, accounts for only about 2 percent of China’s overall energy mix.

While China’s oil purchases have been an economic lifeline for Tehran, Chinese importers have not been immune to fears of exposure to US sanctions.

China’s major state-owned refiners such as Sinopec and PetroChina have shunned Iranian oil for years, leaving the trade to independent “teapot” refiners with minimal links to the dollar-based global financial system.

Though the Trump administration has imposed sanctions on these “teapot” refiners and a limited number of China- and Hong Kong-based firms and individuals, it has yet to target major Chinese banks accused of facilitating Iranian oil purchases.

The Trump administration has hinted at targeting China’s financial system as part of its ramped-up sanctions campaign, dubbed “Operation Economic Outcast”, though analysts are sceptical that Washington will risk provoking Beijing’s ire as the sides seek to lower the temperature in their trade war before a scheduled summit between Xi and Trump on September 24.

“The legitimate question is why third countries should be expected to adopt Washington’s unilateral economic policy towards another sovereign state,” said Zichen Wang, deputy secretary-general of the Center for China and Globalization (CCG) think tank in Beijing.

“That does not, however, mean that Beijing will provide Tehran with a blank cheque,” Wang said.

“China is likely to continue opposing US secondary sanctions politically and to defend what it considers legitimate Chinese commercial interests. But past behaviour also shows that major Chinese banks and state-owned companies are highly conscious of sanctions exposure.”

Rhetoric versus reality

Even as Beijing and Tehran have forged closer ties, their relations have for years been marked by a substantial gap between rhetoric and reality.

While China pledged to invest up to $400bn in Iran over 25 years as part of a “comprehensive strategic partnership agreement” signed in 2021, few projects have materialised amid what analysts say is Chinese firms’ reluctance to navigate sanctions and the opaque Iranian bureaucracy.

In 2023, Iran’s then deputy economy minister, Ali Fekri, complained that he was “not satisfied” with China’s level of investment since the agreement, saying it had only amounted to about $185m.

“Iranian experts often blame their government for not doing enough to attract Chinese investors or not pushing Chinese companies to share more technology,” said Andrea Ghiselli, head of research at the ChinaMed Project.

“However, the reality is that there is no point for Chinese companies to give up their ties with the international financial system to expand their business in Iran,” Ghiselli said.

“It is much easier and more profitable to trade and invest elsewhere. Iran’s own domestic physical and bank infrastructure is also an obstacle.”

Meanwhile, the most tangible measure of China’s economic support, purchases of Iranian oil, has been dwindling amid the US blockade of Iranian ports.

Iranian crude exports via the Strait of Hormuz, mostly bound for China, fell from an estimated 1.85 million barrels per day (bpd) in March-April to just 240,000bpd in August, according to data from ship-tracking platform Kpler, though millions more barrels shipped before the blockade are still at sea.

In an interview with CNBC on Monday, US Treasury Secretary Scott Bessent said “only” about 30 million barrels of Iranian oil remained on the water and Chinese remittances to Iran were “going to run out”.

Kpler last month estimated that about 80 million barrels were in on-water shortage, enough to provide revenues to Tehran for up to six months.

“For China, Iran is valuable – but replaceable across many dimensions. Iranian oil matters, but China can obtain energy from Saudi Arabia, Russia, Iraq, the UAE, and numerous other suppliers,” said Mordechai Chaziza, an expert on China’s Middle East policy who lectures at Ashkelon Academic College in Israel.

“Iran offers geopolitical access, but China possesses relationships throughout the region. Iran supports China’s multipolar agenda, but so do many other states.”

China’s support for Iran is also not risk-free for Beijing, given its important relationships with Iranian rivals such as Saudi Arabia and the United Arab Emirates, Chaziza said.

“Saudi Arabia and the UAE are major energy and commercial partners.

“Gulf stability is vital because China obtains roughly half of its crude imports from the Middle East,” he added.

The “ideal outcome” for Beijing, Chaziza said, would be “a stable, sovereign, economically connected, and internationally non-Western” Iran, but not one “whose confrontation with Washington, Israel, or the Gulf monarchies forces China to choose sides”.

Wang, at the CCG, said that while Beijing appears determined to defend Chinese commercial interests, it is unlikely to sacrifice its broader interests in the region or elsewhere.

Beijing’s warning that it is ready to take countermeasures against unilateral sanctions is “not the same thing as promising to underwrite the Iranian economy”, Wang added.

For China, Iran is seen more as a customer than an ally, said Kerri Bitsoff, a former senior official at the US Treasury’s Office of Foreign Assets Control.

“I don’t think this is the alliance some people think it is, even though there’s real support. I think of a more like a customer relationship that Iran can’t walk away from,” Bitsoff said.

“And it was good for China – they got cheap oil, they got a US tied up in the Middle East, but I think that only lasts up until the point where it threatens China’s other interests,” she added.

United States President Donald Trump has threatened more attacks on Iran, warning that Washington could hit Iran “anytime we want”, as the death toll from the latest US strikes climbed to 18, with at least 108 others wounded.

Trump’s threat on Wednesday came after the US and Iran exchanged their biggest barrage since July. The US military struck cities and areas along Iran’s southern coast, near the blockaded Strait of Hormuz, including a wedding party in the city of Kuhestak.

Iran retaliated with attacks on US bases across the Middle East, including Bahrain, Iraq and Jordan.

Speaking to reporters at the White House, Trump said, “We hit them very hard last night” and that the strikes “took out all of the new equipment that they tried to build along the Strait of Hormuz”.

“It was a very heavy attack last night. And we’re prepared to do another one. And anytime we want,” he said.

Iranian officials said at least 18 people were killed in the US strikes.

The victims included two children, according to Mohammad-Reza Zafarghandi, Iran’s health minister. One of them was a four-year-old who was killed in the strike on the wedding party in Kuhestak in Sirik county.

At least four people were killed in that strike.

Esmaeil Baghaei, the spokesman for Iran’s Ministry of Foreign Affairs, described the Kuhestak attack as a “war crime” and hit back at US claims that it does not target civilians.

“The reality is so horrifying that even American propaganda has never dared make the claim [the US military] is making today. Sirik is not a story. The civilians are real. The victims are real”, Baghaei wrote on X.

Iranian media said the funeral for the four Kuhestak victims will be held on Thursday.

‘Uncomfortable strategic position’

The six-month war has led to a spike in oil prices, roiled the global economy and posed increasing political problems for Trump’s Republican Party ahead of November midterm elections in the US.

Only 31 percent of Americans approve of the war, while some 63 percent disapprove, according to a poll by the Reuters news agency and the Ipsos polling firm in August. Voters are particularly unhappy about high gas prices. Since the fighting resumed this weekend, the price of Brent crude oil, the international standard, has climbed to about $95, up more than 30 percent from the start of the war.

Trump’s approval rating has also fallen from 40 percent to 33 percent since the conflict began, according to Reuters/Ipsos polling.

On Wednesday, Trump said he did not think the renewed military campaign ⁠would last long. He also reiterated his position that the upcoming elections were not a factor in his Iran strategy.

“Number one, I’m not running. My party is running, and I’m going to help my party,” he told reporters in the Oval Office. “But I think my party respects the fact that we’re not allowing Iran to have a nuclear weapon.”

Iran has denied seeking a nuclear weapon.

Tariq Khan, a retired Pakistani lieutenant-general and former commander of the Pakistan Army’s Frontier Corps, said the US “now finds itself in an increasingly uncomfortable strategic position in the Iran war”.

“The US has not succeeded in restoring the maritime environment that existed before the war, and is now expending military resources to deal with a problem the war itself helped create,” he told Al Jazeera, referring to Iran’s closure of the Strait of Hormuz.

The strait was a free-flowing international waterway carrying roughly one-fifth of the world’s traded oil before the war. Tehran shut the waterway in response to the US and Israeli strikes on February 18 that began the war. Despite repeated US claims that the strait remains open, only a handful of vessels now pass through each day, and Iran continues to target ships attempting the crossing.

On Wednesday, Iran’s Islamic Revolutionary Guard Corps (IRGC) said two oil tankers had struck mines and were disabled while attempting an unauthorised transit. Separately, Saudi shipping firm Bahri reported that two Filipino sailors were killed in an attack on their vessel earlier in the week.

Iran’s Persian Gulf Strait Authority (PGSA), which Tehran set up to police the Strait of Hormuz, added 11 more ships to its blacklist for alleged “noncompliance” this week, on top of the 45 blacklisted last week. The PGSA said the vessels will face fines, seizures or confiscation unless they submit required documentation to Iran before attempting to cross the strait.

Strait of Hormuz

At the same time, the US has intensified an economic isolation campaign against Iran, threatening to slap countries that ‌trade with Tehran with massive sanctions, while also maintaining its own blockade in the Strait of Hormuz.

Trump on Wednesday continued to insist that Washington was in control of the strait, saying US forces were helping bring “lots of boats out every day with millions of barrels of oil”.

“We are, for the most part, doing it without trouble. Every once in a while they shoot a drone, and we knock it down. We have control, very strong control,” he said.

On Tuesday, he had claimed the US Navy was helping escort some 30 ships out of the strait every day. Before the war, some 130 ships transited the waterway daily.

Khan, the former Pakistani general, said Iran understands it cannot defeat the US conventionally and is seeking to make the war costly for Trump.

“If Trump escalates, Iran can portray America as being drawn deeper into another Middle Eastern war; if he restrains himself, Tehran can claim that American military superiority cannot compel Iran to surrender,” he said.

“Iran does not need a battlefield victory; it needs to remain standing, keep the economic disruption alive, and make the war politically costly for the US. Tehran has to make American victory increasingly unaffordable – militarily, economically and electorally.”

THE HOOK

Late Monday, Donald Trump signaled the ceasefire with Iran was effectively over, threatening fresh strikes and casting doubt on the reopening of the Strait of Hormuz. Brent crude jumped past $90 a barrel. By Wednesday morning, the US Dollar Index had climbed to 99.73 — its highest in nearly three weeks — and the 10-year Treasury yield touched 4.81%, just shy of a 52-week high. The reason: traders now put the odds of a September Fed rate hike near 65–70%, not a cut.

THE MECHANISM

The chain runs cleanly enough to name. Iran’s conflict with the US raises the odds of a shipping disruption through Hormuz, which carries roughly a fifth of global oil supply; oil-price risk feeds straight into headline inflation; and a Fed under Chair Kevin Warsh — already fighting credibility questions after an ambiguous hold in July — cannot afford to look soft on prices while a war pushes them up. That is why futures markets have swung from pricing no move in 2026 to pricing a hike at the September 15–16 meeting.

Higher US rates make dollar assets pay more relative to everywhere else, which is the direct channel behind both the stronger DXY and the 4.81% ten-year. The winners are near-term and narrow: holders of short-dated Treasury bills, whose yields rise with the policy rate; US money-market funds; and, oddly, the stablecoin issuers whose reserves sit almost entirely in T-bills and now earn more for holding them. The losers are broader and slower-moving: emerging markets carrying dollar-denominated debt face a double bill, since a stronger dollar raises the local-currency cost of repayment at the same moment their own borrowing costs rise in sympathy with Washington’s. Oil-importing economies — India, Turkey, Japan, the eurozone — take a second hit, paying more for crude in a currency that is simultaneously getting more expensive to buy. Gold, meanwhile, is caught between two forces: safe-haven demand from the war pulls it up, rate-hike expectations pull it down, which is why it sits near $4,304, off its recent peak but still up 21% over the year.

WHY IT MATTERS

The apparent contradiction — dollar strong this week, dollar weaker for the decade — is really two different clocks running at once. Reserve managers make multi-year diversification bets; traders react to a war in hours. The IMF’s COFER data put the dollar at 57.13% of allocated reserves in the first quarter of 2026, down from 72% in 2000, and a recent survey of reserve managers found roughly three-quarters expect that share to keep falling over the next five years. None of that is undone by one hawkish week from Kevin Warsh.

What is new is where the dollar’s reach is actually growing: not in central bank vaults but in stablecoins. The GENIUS Act framework — now the subject of a Treasury rulemaking comment period that closes in October — has pushed issuers to back their tokens almost entirely with short-dated Treasuries, and forecasts from Standard Chartered and Senator Bill Hagerty put potential T-bill demand from stablecoins as high as $2–2.3 trillion. That is dollarization happening retail-first, in emerging-market wallets and crypto exchanges, invisible to COFER. For Washington, a Fed hike timed to a war raises borrowing costs precisely when the deficit needs cheap financing, and when the countries least able to absorb dearer dollars — many of them US partners, not adversaries — get hit hardest. That is a form of collateral leverage no sanctions list ever names.

WATCH FOR

The September 15–16 FOMC meeting is the date that resolves this. A 25-basis-point hike would confirm markets are right to treat this as an inflation fight, not a growth scare, and would likely push the dollar and yields higher still. A hold — especially if Hormuz tensions ease and oil retreats from $90 — would suggest Warsh blinked, and could send gold back toward its highs faster than the dollar can catch up. Either way, watch the Fed funds futures curve shift in the two weeks before the meeting.

US says its forces ‘successfully’ completed a wave of strikes against Iranian targets, accusing the IRGC of attempted attacks on shipping and US service members.

The IAEA said lack of information and access to facilities to verify Iran’s nuclear material is a proliferation concern.

The International Atomic Energy Agency (IAEA) has called for “utmost urgency” to address the lack of access to Iran’s nuclear sites.

In a quarterly report seen by news agencies on Tuesday, the United Nations nuclear watchdog labelled its “lack of information about this nuclear material and access to facilities to verify it is a matter of proliferation concern”.

The US has claimed preventing Iran from acquiring a nuclear weapon – an ambition that Tehran continues to deny – as the motivation for the war that it launched in March. However, Tehran has been successful in shifting the focus of the hostilities to control of the strategic Strait of Hormuz waterway.

In particular, the IAEA report raised concerns over the lack of access to the Isfahan plant, which was targeted several times by the US and Israel over the past year or so.

In the report, IAEA Director General Rafael Grossi expressed his “conviction that the long-standing problems and recurrent crises surrounding these issues must be resolved through a long-lasting, verifiable diplomatic agreement”.

However, Iran has said that access to the sites that have been struck by military action must be arranged via special arrangement.

The head of Iran’s Atomic Energy Organization, Mohammad Eslami, said on August 26 that the IAEA “cannot seek to inspect these centres until it develops specific criteria and protocols for inspecting sites targeted by military attacks”.

Tehran suspended cooperation with the UN nuclear watchdog following US and Israeli attacks on Iran in June 2025 that included strikes on nuclear sites before saying in September 2025 it would allow the UN agency’s inspectors to return.

However, access to the nuclear sites that have been bombed has not yet been granted. Despite US President Donald Trump having claimed last year that the US had destroyed the facilities and crippled Tehran’s nuclear programme, Iran’s stores of enriched uranium remain unaccounted for.

Tehran has repeatedly denied any military ambition linked to its nuclear programme, insisting on its right to the technology for civilian purposes.

However, the IAEA, whose latest report will be discussed at its board of governors meeting from September 21-25, has reported in the past that the level of Iran’s enrichment of its uranium reserves is well above that needed for civilian purposes, although neither is it at the level of weapons grade.

DEVELOPING STORYDEVELOPING STORY,

US says it is attacking IRGC targets following ‘attempted attacks’ on ships in Strait of Hormuz.

The United States military says it is conducting new strikes against Iran as fighting renews between the two countries.

The Middle East-based Central Command (CENTCOM) of the US military said on Tuesday that it was hitting Islamic Revolutionary Guard Corps (IRGC) targets.

“The strikes follow recent attempted attacks by the IRGC against commercial shipping in the Strait of Hormuz and against American service members deployed to the region,” CENTCOM said.

Iran has previously responded to similar US attacks, so the strikes risk sparking a new cycle of fighting.

Iranian semiofficial news agency Tasnim reported explosions in the south of the country, including in Konarak, Bandar Abbas and Qeshm Island.

Tuesday’s strikes follow an exchange of attacks on Sunday when the US military struck Larak Island in southern Iran and Tehran retaliated with missile launches against a base housing American troops in Jordan.

The fighting on Sunday saw the first attacks by both countries since July. The administration of US President Donald Trump had said that it was shifting its strategy from military strikes to intense economic pressure on Iran.

The US has imposed a naval siege on Iranian ports while threatening Tehran’s trade partners with secondary sanctions.

But Iran continues to assert its control over Hormuz – a major artery for the global energy trade. However, in recent weeks, Trump and his aides have said that the US is managing to get millions of barrels of oil through the strait daily despite the Iranian blockade.

Still, attacks on ships around the strait have been reported almost daily.

On Monday, the UK Maritime Trade Operations (UKMTO) said an oil tanker was hit by three “unknown projectiles” while transiting through Hormuz.

More to come…

Shares in fast-fashion giant Shein fell as much as 10% on their trading debut on Hong Kong’s stock market on Tuesday, before recovering some of their losses, following years of delay to the company’s plans to list publicly and regulatory setbacks in Europe and in the US.

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Shein’s initial public offering opened on 24 August, with the final share price set a week later on 31 August. Trading began the following day, on Tuesday.

The gap reflects standard IPO process, as investors placed their orders over about a week, the banks running the deal then fixed the final price and decided who got shares, and trading opened a few business days later once the exchange gave the final go-ahead.

The listing marks the end of a long search for a stock market willing to take Shein after plans to list in New York and London stalled amid scrutiny over its Chinese supply chains, forcing the company to turn to Hong Kong instead.

New US and EU tariffs on low-cost parcels from China, along with rising shipping costs from the war in Iran, have contributed to Shein’s swing from a $395 million (€340mn) profit to a $99 million (€85mn) loss in the first quarter of this year.

Shein raised about $1.7 billion (€1.46bn), pricing shares at HK$48.56 (€5.33) each, in one of the city’s biggest share sales this year.

“Shein’s Hong Kong listing marks a new starting point,” said Leigh Gui, Shein’s chief financial officer, in a short speech at its listing ceremony.

But in early trading, the shares fell to below HK$44 (€4.83) before losses narrowed.

Tariffs squeeze profits

Shein has built its appeal to customers on ultra-fast, affordable fashion, delivered from China to the West within days.

However, the end of “de minimis” tariff exemptions in the US and the European Union has raised duties on low-value parcels from China, including Shein’s products. Higher logistics costs, driven partly by the war in Iran, have also squeezed the company’s low-price business model and profitability.

Tariff costs have forced Shein to raise prices, “cutting into its main advantage,” said Jacob Cooke, CEO of WPIC Marketing + Technologies.

Back to its roots

Shein, pronounced “she-in,” earlier explored listing its shares in New York and London, and moved its headquarters from China to Singapore in 2021.

But increasingly strict scrutiny by Beijing and by regulators in the US and Europe led it to embrace its Chinese roots and switch to a Hong Kong listing.

Launched in 2012 in China, much of Shein’s operations were in the southern province of Guangdong before it moved its corporate headquarters out of the country.

“Guangdong is Shein’s roots, and the starting point of our journey,” founder Sky Xu said in a speech in February.

Pivoting its focus back to China also highlighted the advantages Shein derives from a supply chain system that “only exists” in Guangdong, said William Ma of GROW Investment Group, referring to its small-batch, fast-response manufacturing model.

Shein has hit other roadblocks in expanding in Europe. In February, the EU launched a probe into the company with a focus on “illegal” products, including alleged child sexual abuse material.

In May, Shein acquired San Francisco-based eco-friendly clothing retailer Everlane, a move some analysts said was not the best fit.

Hong Kong’s IPO boost

The company’s market value was roughly $27 billion (€23.2bn) as it listed in Hong Kong, a fraction of its peak valuation a few years ago.

“Shein has probably missed its golden listing window due to the shift of momentum toward AI and tariffs, which can affect valuations and profitability,” said Gary Ng, a senior economist for Asia Pacific at French bank Natixis.

Still, Shein’s listing is welcome news for Hong Kong, as the Chinese territory makes increasing efforts to hold onto its role as a global financial hub following a downturn in 2023.

Hong Kong’s stock exchange has had a strong year for IPOs, raising more than $40 billion (€34.4bn) so far.

There is also a backlog of companies seeking to list there, said Lorraine Tan at investment research firm Morningstar.