Trump administration makes bringing gas prices down a priority while Iran signals it is impervious to more economic sanctions
By Georgi Kantchev and Laurence Norman
Senior Trump administration officials have doubled down on economic pressure in the fight with Iran, making lower oil prices a top war aim and vowing unprecedented financial sanctions that would force Tehran to reopen the Strait of Hormuz.
Iran late Thursday attacked two United Arab Emirates ships in the strait, Emirati officials said.
With those strikes, Iran is signaling that it is impervious to more economic sanctions and is willing to take the military initiative even when President Trump appears reluctant to return to a shooting war. With Trump relying more on the Navy's blockade of Iranian ports as financial pressure on Tehran, Iran's leaders are trying to show they won't relent and will keep the strait closed until energy prices force the U.S. to back off, analysts said.
"Tehran has drawn a simple lesson from every game of chicken with Washington: Hold your nerve long enough, and America swerves first," said Ali Vaez, the International Crisis Group's deputy program director for the Middle East and North Africa. "For a system that believes it is fighting for survival...existential threats tend to harden resolve, not impose a price ceiling on resistance."
Washington this week indicated it would slap new restrictions on Iran's economy in the coming days. Treasury Secretary Scott Bessent said it would be a "one-two punch" along with the U.S. naval blockade of Iranian ports.
The efforts by both sides to inflict economic damage on each other put them further from the diplomatic off-ramp they appeared to reach with the deal in June. That agreement set out financial rewards for Tehran if it reopened the strait and entered serious negotiations on its nuclear program.
Vice President JD Vance spelled out the administration's priorities Thursday, telling Fox News that keeping energy prices down was "goal number one."
"And then obviously goal number two is to ensure that Iran never gets a nuclear weapon," Vance said. "I feel confident we're accomplishing both of those goals."
"Both goals are equally as important to the president," White House press secretary Karoline Leavitt told reporters Friday. "That's why the administration has done so much to keep the markets stable, but also ensuring Iran can never get a nuclear weapon is the president's priority with respect to the ongoing conflict, and it's something he's going to see through one way or another."
Trump began the war declaring that his goal was to force Iran into a deal that would prevent it from ever obtaining a nuclear weapon. But as the conflict has worn on, and Tehran has asserted control it didn't have before over global energy flows in the strait, his priorities appear to have shifted.
The White House has become increasingly pessimistic in recent weeks about achieving a final nuclear settlement with Tehran. Instead, Trump has focused on squeezing Iran's battered economy so the regime does a deal to open the waterway that would let him declare victory in the war and move on, U.S. officials said.
For Iran, control over Hormuz enables it to make demands on the U.S. without having to concede anything over its core nuclear program.
Iranian officials believe they have time on their side and have expanded their demands for reopening Hormuz. Tehran says the U.S. needs to end the war, lift its blockade and provide relief from crippling sanctions and freezes on Iranian cash.
The central question of the conflict has now become: which side blinks first under economic pressure. The war of words ramped up Friday.
"After we finish defeating Iran, which is being very badly defeated, pretty soon I'll be declaring the Hormuz Strait a territory of the United States," Trump said during a speech in New York state on Friday.
A White House official later said Trump's remarks were made in jest.
In response, Iran's deputy foreign minister, Kazem Gharibabadi said on X that "The Strait of Hormuz has been Iranian, is Iranian, and will remain Iranian; this strait will only be closed and opened under Iran's command."
Defense Secretary Pete Hegseth said Thursday the Navy could sustain the blockade on Iran indefinitely. U.S. officials said the military is preparing to replace the USS Abraham Lincoln aircraft carrier in the region with the USS George Washington, amid growing concerns over living conditions aboard the Lincoln and the strain on troops from extended deployments during the war.
Iran has repeatedly used force to keep commercial vessels out of the strait. Analysts say Tehran's ability to escalate militarily makes it harder for Washington to wring out concessions with economic pressure alone.
The attack on ships affiliated with the U.A.E.'s Abu Dhabi National Oil Co. brought the total to six so far in August. The U.A.E., a major oil exporter, has pushed to get shipments quietly through Hormuz despite Iran's chokehold.
The waterway remains largely closed, with most ships unwilling to cross without a go-ahead from Iran -- and those that do using the northern route administered by Tehran.
Ship-tracking data from Kpler says that 13 vessels on Thursday crossed a waterway that routinely handled more than 130 a day before the war. Nine of them took the route administered by Iran. Traffic this month has slowed from July, when an average of 26 vessels crossed the strait every day.
International oil prices have oscillated under $90 a barrel in recent days. The flows from the strait remain curtailed, but the region's producers have managed to find workarounds beyond the chokepoint to keep their crude moving.
Still, the continued disruptions are running down global oil inventories and reducing the market's ability to absorb shocks.
"The latent tensions between the U.S. and Iran over the status of the waterway will keep the risk of another crisis -- and another closure -- relatively high through the rest of 2026," analysts at Eurasia Group consulting firm wrote in a note to clients.
Trump now favors trying to limit the war's impact at home ahead of the midterms and avoid a return to all-out fighting by intensifying economic pressure on Iran. Aides have helped sell him on the strategy by showing him data on the damage that sanctions have already inflicted on the regime, The Wall Street Journal has reported.
Bessent signaled that the pressure campaign is about to intensify, telling Newsmax more measures would be announced next week.
Miad Maleki, a former senior Treasury Department figure now at the Foundation for Defense of Democracies, said Iran's oil exports have dropped from two million barrels a day before the April blockade to near zero recently and that Tehran has a shortfall of around 29 million liters a day in gasoline supplies that the blockade prevents it from filling.
"The blockade can bring the regime to its knees if Washington makes clear that it will not be lifted on a timetable Tehran can wait out," he said.
While Iran is suffering mounting economic pain, it is shifting into a survival economy designed to endure it. Tehran, which has endured years of sanctions, is pushing more of the burden onto households by rationing fuel and electricity, restricting scarce foreign currency and cutting investment while preserving essential imports and state resources.
Washington similarly tried to force Iran's hand earlier in the war when it imposed the naval blockade just days after reaching a fragile ceasefire. Some U.S. officials were confident at the time that the blockade would force Iran to settle the war on their terms within weeks.
Instead, Trump agreed to the deal in June that ended the blockade in exchange for Iran's pledge to reopen the waterway and discuss its nuclear program. After a few weeks, Iran, objecting to U.S. efforts to guide ships through the waterway, went back to attacking vessels.