Iran threatens ‘devastating’ response as US vows to hit it with toughest sanctions

Iran has warned that any fresh escalation by Washington will trigger a “devastating” response, setting the stage for another dangerous confrontation as the Trump administration prepares what it calls the toughest sanctions package ever imposed on Tehran.

The threat from Tehran came a day after US Treasury Secretary Scott Bessent announced that Washington would unveil details of its new measures on Monday. President Donald Trump had earlier warned that countries providing Iran with an economic “lifeline” would face severe consequences.

Iranian military leaders responded with their own warning.

Chief of Staff of the Armed Forces, Major General Ali Abdollahi, said Iran was prepared to respond across multiple fronts.

“With preparedness across land, sea, air, air defence and cyberspace, Iran’s armed forces will respond to the enemy’s new threats with crushing, punishing and devastating responses.”

The latest exchange adds another layer of tension to a conflict that has already disrupted energy markets, threatened shipping through the Strait of Hormuz and drawn several Gulf states into the crisis. Reuters reported that Tehran's warning came as Washington moved to intensify its economic campaign against the Iranian leadership. 

Washington’s ‘one-two punch’

Bessent has presented the coming measures as the economic counterpart to America's military pressure on Iran.

Speaking to CNBC, he said: “It is a one-two punch. We have the blockade (on Iran), and we are going to have the toughest sanctions in history.”

He went further, saying the measures were intended to force a fundamental political change in Tehran.

“It is going to work in Iran and we are going to collapse this regime. It is time for our allies and the rest of the world to make a decision.”

Bessent said he would explain the details at a news conference on Monday.

The administration's strategy appears increasingly focused on strangling Iran's economic lifelines rather than immediately expanding the military campaign. Bessent argued that maximum economic pressure could reduce the need for another large-scale military escalation. 

That strategy, however, carries a major risk: Iran has lived under US sanctions for decades and has developed extensive networks for circumventing restrictions.

Tehran refuses to bend

Iranian Parliament Speaker Mohammad Baqer Qalibaf, who has played a central role in mediated negotiations with Washington, said Tehran must prepare for the new economic assault rather than expect the pressure to disappear.

“We must make plans to deal with the unjust sanctions so that we can overcome them.”

Qalibaf accused the United States and Israel of waging not only economic warfare but also what he described as “cognitive” warfare against Iran.

Iran's Foreign Ministry has similarly condemned the sanctions as “economic terrorism”, insisting that pressure from Washington would not weaken the country's determination to defend its sovereignty.

The latest rhetoric suggests that neither side sees the other as having achieved a decisive victory. Tehran believes Washington is increasingly turning to economic warfare after failing to force an outright military capitulation, while the Trump administration believes intensifying pressure can finally compel Iran to accept its demands.

Oil markets feel the heat

The confrontation is already being reflected in global oil prices.

Crude prices climbed to a more than three-week high on Thursday after the new sanctions threat, as traders weighed the possibility of further disruption to oil exports from the Gulf.

On Friday, prices steadied but remained on track for a second consecutive weekly gain. Reuters reported that Brent had briefly reached about $94.71 a barrel amid renewed concerns over supply disruptions.

Bessent, however, argued that the economic strategy should ultimately reduce the likelihood of another major military escalation.

“I’m not sure why oil has popped up on this.”

He added: “If we are doing the maximum economic pressure, then that means that likely there will not be a large-scale kinetic restart.”

But the Strait of Hormuz remains the critical pressure point.

The waterway is one of the world's most important oil arteries, and the conflict has sharply reduced shipping through it. Reuters reported on Friday that only seven commodity ships passed through the strait, roughly half the number recorded the previous day. 

Gulf economies caught in the middle

The consequences are extending beyond Iran and the United States.

The United Arab Emirates this week suspended trade and financial transactions with Iran after renewed missile incidents, further cutting one of Tehran's important regional commercial channels. Abu Dhabi's move has added to the economic squeeze facing Iran while demonstrating how the conflict is forcing Gulf states to make increasingly difficult choices. 

China is another major complication for Washington.

Beijing remains a crucial buyer of Iranian oil, meaning an aggressive campaign against Iran's economic lifelines could put the United States directly at odds with one of its biggest global trading partners.

China has already rejected sanctions as a solution to the conflict and called for diplomacy.

A war with no easy exit

The conflict has now lasted nearly six months, with thousands of people killed and two previously announced ceasefire arrangements collapsing.

The United States is under growing domestic pressure to bring the war to an end, particularly as higher fuel prices threaten to deepen economic pain at home and become a political liability for Trump and his Republican Party ahead of November's midterm elections.

Yet Washington's latest strategy is moving in the opposite direction: more pressure, broader sanctions and a threat to punish countries that continue helping Tehran.

Iran, for its part, is signalling that economic isolation will not force capitulation.

That leaves the two sides locked in a familiar cycle—Washington promising maximum pressure, Tehran promising maximum resistance—and with the Strait of Hormuz and global oil markets sitting dangerously in between.