Key Takeaways

• Iran warns of "seismic" retaliation for any nation joining its economic conflict with the US.
• Tehran threatens to block all oil exports from the Gulf, including via alternative routes.
• Diplomatic efforts stall as new US sanctions loom, heightening regional geopolitical tensions.
• Gulf states face difficult balancing acts between US alliances and necessary relations with Iran.

Iran has issued a stark warning that it will retaliate against any country that joins the United States in its ongoing "economic war." This threat comes as diplomatic efforts to resolve the months-long conflict have stalled, and shipping through the critical Strait of Hormuz has seen a drastic decrease. The warning, issued by Iran’s top security official on Saturday, coincides with plans for the US to announce new sanctions on Monday, which are expected to further strain the already struggling Iranian economy.

Mohsen Rezaei, secretary of Iran’s Supreme National Security Council, addressed the nation via state broadcaster IRIB, appealing to global powers, including its immediate neighbors, to abstain from supporting Washington’s economic measures. “Any country that takes part in imposing economic restrictions on us will be regarded as an enemy,” Rezaei stated, explicitly warning of “seismic” retaliation. He further cautioned that if nations participate in what he termed President Donald Trump’s economic warfare, “not even a drop of oil” would leave the Gulf region. This threat extends beyond the traditional Hormuz chokepoint, which handles a fifth of global oil and gas exports in peacetime, to include alternative export routes.

The geopolitical landscape is further complicated by Iran’s recent military actions. Since the war began on February 28, Tehran has attacked US military installations and civilian locations, claiming these actions were justified by the alleged proximity of US nuclear bombs-a claim subsequently debunked by US intelligence and the UN’s IAEA nuclear watchdog. The US maintains military facilities in over a dozen locations across the Middle East and North Africa, including in Bahrain, Kuwait, Qatar, Saudi Arabia, and the UAE, with thousands of soldiers stationed in the region, including in Jordan.

US President Donald Trump recently announced that his government would launch the “most crushing economic operation” yet against Iran. He pledged “tremendous economic consequences” for any nation that provides Iran with a lifeline. Echoing this stance, US Treasury Secretary Scott Bessent declared, “You’re either with us or against us,” while urging cooperation from China, which purchases more than 80 percent of Iran’s oil shipments.

In response, Iranian President Masoud Pezeshkian declared on Sunday that the country is engaged in a “full-scale economic, military and security war” with the US. He criticized Washington’s pre-war predictions that Iran would collapse and resemble Venezuela, noting instead that Iran has demonstrated “resistance, solidarity and cohesion” that amazes the world.

Strategic Responses and Regional Implications

Rezaei outlined a three-stage strategy for Tehran. The first stage involves negotiations, where Iran will urge cooperating countries to distance themselves from the US. However, he made it clear that if these diplomatic overtures fail, the second stage will involve striking the interests of those countries. The threat to alternative export routes likely points to the Bab al-Mandeb Strait, a gateway to the Red Sea. Saudi Arabia has utilized this route for oil exports following the blockade of Hormuz. Tehran has imposed a blockade on Hormuz in response to the US war, using it as leverage in negotiations, while the US has placed Iranian ports under a naval blockade, impacting international trade.

Hamidreza Azizi, a researcher at the Clingendael Institute, described Iran’s new “offensive doctrine” as emerging from two elements: preemption to prevent perceived threats, and disproportionate retaliation to raise the cost of attacks. He noted that Tehran is trying to establish deterrence at an earlier stage, signaling that even preparations for an attack could trigger a response. This warning to Gulf states is essentially an ultimatum, with Iran’s military-security establishment increasingly preparing for further escalation.

The position of Gulf countries remains precarious. These nations, both neighbors and US allies, are caught in the middle of the conflict. While they have condemned Iranian attacks, analysts suggest that Gulf states closely aligned with Washington recognize the necessity of a political relationship with Iran due to proximity. The UAE restored diplomatic relations in 2022 but imposed a recent trade embargo, accusing Tehran of a missile attack, which Iran denies. Similarly, Saudi Arabia and Iran agreed to normalize ties in 2023 under a Chinese-brokered deal, calculating that engagement is safer than permanent confrontation.

Simon Mabon, a professor of international relations at Lancaster University, noted that Gulf countries cannot change geography and must live with Iran. He suggested that some Gulf states may push for harder strikes not to cause collapse, but to weaken hardline elements of the IRGC. However, Trita Parsi of the Quincy Institute for Responsible Statecraft highlighted that while diplomatic confidence is low, no nation can afford another long war. Depleted global oil inventories, which have not been fully replenished during recent ceasefire periods, make prolonged confrontation unattractive.

Historical Context of Sanctions

The current crisis is rooted in decades of tension. Since the 1979 Islamic Revolution, economic sanctions have been a primary tool of Western pressure. The US first imposed sanctions after students took Americans hostage at the US embassy in Tehran, halting oil imports and freezing $12bn in assets. In 1995, President Bill Clinton issued executive orders preventing US companies from investing in Iranian oil and gas. In 2006, the UN Security Council imposed sanctions on Iran’s nuclear-related trade, which were intensified in subsequent years as uranium enrichment programs restarted in 2005.

The 2015 Joint Comprehensive Plan of Action (JCPOA) temporarily lifted sanctions in exchange for caps on Iran’s nuclear program. However, in 2018, Trump withdrew from the treaty and reimposed sanctions as part of his “maximum pressure” campaign. In 2019, the IRGC was designated a Foreign Terrorist Organisation, with further sanctions targeting petrochemical sectors, establishing the current framework of conflict.

Future Trajectory of the Conflict

As the US prepares to announce new sanctions, the risk of further escalation remains high. The combination of depleted global oil inventories and Iran’s willingness to target alternative trade routes suggests that the region is entering a volatile phase. While Gulf states may resist joining the US fully to avoid instability, the pressure from Washington and the threats from Tehran create a fragile equilibrium. The long-term impact will likely depend on whether diplomatic backchannels can emerge from the current stalemate or if the economic warfare leads to a broader, uncontrolled regional confrontation that disrupts global energy markets significantly.