The United States is preparing a major new campaign of economic pressure against Iran, with President Donald Trump threatening consequences for countries and companies that continue doing business with Tehran. Almost six months into the war, shipping through the Strait of Hormuz remains severely disrupted and oil prices are rising, but as Washington increases pressure from their end, Gulf nations are stepping up diplomatic efforts in a bid to to restore normality and navigation.
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TRANSCRIPT
Almost six months into the war with Iran, the United States President is upping the pressure by threatening to impose stronger sanctions.
President Donald Trump is promising what he calls the "most crushing economic operation ever taken against any country", framing it as it an "Economic D-Day".
And the threat extends well beyond Iran.
On social media, Mr Trump said:
"Today, I am also announcing that ANY country that allows its financial institutions, businesses, airports, or government entities to provide any type of lifeline to Iran will itself face TREMENDOUS Economic Consequences."
Exactly what those consequences will entail has not been detailed, but the intention is clear, to isolate Iran even further.
The announcement immediately rattled energy markets, with Brent crude rising more than two per cent to approach US$94 [[AU$132]] a barrel, while U-S benchmark West Texas Intermediate climbed to around US$86 [[AU$121]].
U-S Treasury Secretary Scott Bessent noted a jump in oil prices, but says U-S actions will lower prices.
"We've got a spike in oil prices today that I don't really understand. You know, our announcement is for economic action. And I think that the economic action will mean that oil prices will come down sooner."
For now, energy prices remain elevated, in large part because shipping through the Strait of Hormuz remains severely restricted.
Before the war, about a fifth of the world's traded oil passed through the waterway.
Traffic is now a fraction of normal levels.
This has put enormous pressure on Gulf states to find a way of getting traffic moving normally again.
At the centre of those efforts is Oman, which sits opposite Iran across the strait and has been negotiating directly with Tehran.
Foreign Minister Badr al-Busaidi spoke about what is at stake during a visit by his Japanese counterpart Toshimitsu Motegi.
"Mr Motegi and I also exchanged views on the regional situation and in particular the Strait of Hormuz, where (for) the Sultanate of Oman safe passage through the Strait is inseparable from the security and prosperity of the wider region."
Oman and Iran say they are nearing an agreement over shipping through the strait, although a final deal is yet to be announced.
But those negotiations have opened another issue with Washington.
President Trump has threatened to attack Oman for what he calls "getting in the way", while at the same time insisting shipping through the strait has returned to normal, and while depicting the Strait of Hormuz as a U-S territory.
The threat has not stopped other Gulf governments pursuing their own diplomatic efforts with Tehran.
Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani.
"The State of Qatar is working in consultation with our brothers in the Gulf Cooperation Council and in the region to find other diplomatic ways with the Iranian side to restore navigation to its normal course, and we hope that this will at least be a positive step towards completely defusing the crisis."
But previous attempts at de-escalation have not held.
The U-S and Iran announced ceasefire agreements in April and June, but both quickly broke down, while a 60-day negotiating period agreed in June has now expired without a final peace agreement.
For Oman, that experience points to a problem much larger than simply getting ships through the strait.
Oman's foreign minister again:
"Oman is unwavering in its commitment to maritime security through international law and prevention of further escalation or conflict. To guarantee lasting security in the strait, we need lasting peace in the region."
And the longer the disruption continues, the greater the consequences beyond the Middle East.
Alternative routes cannot fully replace the oil normally carried through Hormuz, while higher energy costs are adding to inflationary pressures elsewhere.
Annual inflation in both the United Kingdom and eurozone reached 2.9 per cent in July, partly driven by higher energy prices.
But for Qatar, the argument is not only economic.
"It is also important to remember that freedom of navigation must be guaranteed ... nd that the status of maritime routes should not be held hostage to any political blackmail."
Iran, meanwhile, is rejecting Washington's new economic pressure.
Foreign Minister Abbas Araqchi has accused the US of "economic terrorism", saying Mr Trump's "Economic D-Day" will deepen Iranian hostility towards Washington.
For now, Washington is increasing economic pressure, Iran says it will resist, and Gulf states are pursuing diplomacy to restore shipping through the Strait of Hormuz.
But lasting security may ultimately depend on Tehran and Washington reaching a settlement.
