US economic war on Iran intensifies as Europe confronts ripple effects on energy and security

The Trump administration has escalated its campaign against Tehran with what Treasury Secretary Scott Bessent called “the single greatest financial offensive ever” against Iran, targeting all remaining sources of revenue including oil. The announcement of “Operation Economic Outcast” on August 24 comes as the six-month-old US-Israel war on Iran enters a new phase of economic pressure, but its consequences are already reaching far beyond the Middle East — including into Europe.

Bessent warned that banks, shipping companies, and even governments that continue to trade with Iran would face secondary sanctions. “No one is above the reach of US sanctions,” he said Al Jazeera. The move follows a summer of relative military quiet after US bombing of parts of Iran in July over disputes about the Strait of Hormuz, which has been effectively closed to most shipping since the war began in February.

For European readers following the war in Ukraine, the most immediate risk is energy. Before the conflict, about 20% of global oil and liquefied natural gas shipments passed through the Strait of Hormuz. The closure has already pushed US petrol prices toward record highs, and European economies — already grappling with high energy costs after Russia’s invasion of Ukraine — are vulnerable to further volatility. Iran’s Supreme National Security Council secretary, Mohsen Rezaei, warned last week that if “any countries surrounding Iran join the Americans in their economic war, not a drop of oil will leave the Persian Gulf and the strait of Hormuz” Al Jazeera.

Iran and Oman agree temporary Hormuz route — but with strings attached

In a parallel diplomatic track, Iran and Oman agreed on August 26 on a temporary maritime route through the Strait of Hormuz. Iran’s deputy foreign minister, Kazem Gharibabadi, said the entry and part of the exit would run through Iranian territorial waters and the corridor would be 11.3 km wide. But he insisted the waterway will not fully reopen until the United States fulfills its commitments under a June interim peace deal that has since lapsed Al Jazeera.

Oman’s foreign minister, Badr Albusaidi, said he hoped the corridor would be announced “soon,” with a permanent solution to follow. For now, Iran continues to play a game of “chicken,” betting that global economic pain will pressure President Trump to back down before the US midterm elections, according to Doug Bandow of the Cato Institute Al Jazeera.

Dutch-Israel rift and security service expansion

While the US focuses on Iran, European governments are navigating their own tensions. The Netherlands enacted a law banning trade with Israeli settlements in occupied Palestinian territories, prompting Israel to deport two Dutch representatives working at the Civil-Military Coordination Center (CMCC) — a multinational body that monitors the Gaza ceasefire and coordinates aid. Israeli Foreign Minister Gideon Sa’ar said the move was a response to “a series of anti-Israel measures” NL Times. The Dutch government said it would not reverse the ban.

Separately, the Dutch government proposed a law on August 28 to expand the powers of its intelligence services, the AIVD and MIVD, to counter “evident opponents” — specifically naming Russian hackers, Chinese spies, Iranian operatives, and IS terrorists. Defence Minister Dilan Yesilgöz said the services would no longer need prior approval for digital surveillance of individual hackers, with oversight conducted afterward. “Putin and his friends do not deserve our privacy, but Dutch citizens do,” she said NOS. The move signals that European security agencies are bracing for spillover from both the Iran war and the ongoing confrontation with Russia — a theme that directly touches the security environment for Ukraine and its allies.

US military commitments stretch thin

The diversion of US military resources to the Middle East is already affecting other theaters. South Korea announced on August 24 that the US cancelled the biennial Ssangyong amphibious landing exercise scheduled for September, citing “constraints on force availability” due to the Iran war. The US also cut short the annual Ulchi Freedom Shield drills with Seoul at Trump’s order Al Jazeera. For European allies, this raises questions about US capacity to reinforce NATO’s eastern flank if needed.

Domestic pressure on Trump

At home, the war is eroding support. A Reuters/Ipsos poll released August 24 found just 31% of Americans support military action against Iran, down from 37% in March. Trump’s approval rating matched a record low of 33% Al Jazeera. The administration is betting that economic isolation will force Tehran to negotiate, but Iran’s Economy Minister Ali Madanizadeh said the country has “tools” and experience in sanctions evasion, and that oil exports have nearly stopped but the central bank has cash stockpiles “in places [the US] cannot access” Al Jazeera.

For Ukraine, the key takeaway is that the US — distracted by a protracted Iran war, stretched militarily, and politically divided — may have less bandwidth to support Kyiv against Russia. Meanwhile, European governments like the Netherlands are hardening their own security postures. The next weeks will test whether Washington’s economic war can break Iran without igniting a wider crisis that hits Europe’s energy supply and security architecture.