An economic D-Day for Iran?

Most US treasury secretaries deliver sanctions policy with the emotional cadence of a microwave instruction manual. Not ol’ Scotty Bessent, who took to the pages of Sunday’s Financial Times to declare a full-blown “economic D-day” against Iran.

So, naturally curious about how ol’ Scottie Pippen now plans to storm the beaches of Iran’s economy, we tuned in yesterday (Monday) afternoon to hear his plans for “the single greatest financial offensive ever marshalled against an adversary”. 

Dubbed Operation Economic Outcast, the contours are pretty straightforward: the US is now threatening to impose secondary sanctions on anyone still doing business with Iran, all to “sever every economic lifeline” for the regime.

He’s also…

• a) issuing new sectoral determinations to hit the five key channels Iran uses to keep its economy afloat: digital assets, gold, tech, aviation, and shipping

• b) hitting 60 specific entities and individuals already helping Iran, and

• c) sanctioning an unnamed major financial institution by the end of this week.

Oh, and “any entity that facilitates money laundering on behalf of Iran will be removed from the US dollar system”. 👀

How? 

We don’t know for sure, as ol’ Scott Stifler is also describing it all as a warning shot. But he also flagged that President Trump is now calling world leaders with specific asks and timelines to halt their Iran trade and avoid getting burnt.

But even if we don’t know all the deets, we do know who Iran’s top buyers are: 

China is Iran’s biggest trade partner, hoovering up ~90% of its cheap oil exports. That netted Tehran more than $30B last year, and while those numbers have roughly halved this year, it’s not because Beijing is distancing itself from the regime.

In fact, Beijing’s import data says (with a straight face) that China hasn’t imported a single drop of Iranian oil in years. That’s not because it’s true, but rather because it’s the end result of a world of shadow fleeting, at-sea-transfers, flag-hopping, and re-labelling (often as Malaysian or Omani oil) so the oil lands ‘clean’ — plus settled in yuan via intermediaries — at China’s independent ‘teapot’ refineries in Shandong.

It’s all to give Beijing a veil of plausible deniability.

Meanwhile, it’s actually nerds at places like Kpler that track it all and help us glimpse that China’s oil imports have realistically ~halved this year simply because hardly any oil is now exiting Hormuz (courtesy of the continued US naval blockade).

Russia is another key trade partner, particularly in defence — Putin’s 2022 deal sent Iran a cool $1.75B in return for 6,000 Shahed drones plus the know-how to make them in-house then launch them at neighbouring Ukraine. Putin and Iran are still trading arms — no easier way for Putin to bleed Trump out than to help Iran.

We also know the UAE has long hosted a shadow banking system that helped Iranian entities bypass sanctions (Putin part-paid for his drones via a UAE intermediary), but getting ‘grey-listed’ by FATF forced the Emiratis to tighten up.

Iran’s other big trades are all about selling gas to neighbouring Turkey (~13% of the US ally’s total consumption) and Iraq (~40%!).

And so… how has Iran responded? Interestingly, it’s now vowed to retaliate against anyone who goes along with Operation Economic Outcast — both completely predictable, and yet also a sign the regime does fear DC’s economic hammer. 

But also, keep in mind that this is hardly Tehran’s first sanctions rodeo. To the contrary, these guys have been bronco-busting since the 80s, and it’s actually decades of US sanctions that’ve warped the Iranian economy into its current form.

But for now, the bigger and more immediate question is… will ol’ Scott actually follow through with all this?

We’ll explore further below, but something tells us the greatest financial offensive ever marshalled now risks becoming the greatest financial offensive ever delayed.