Iran threatens military response to US sanctions

By Jana Choukeir, Eman Abouhassira and Susan Heavey

DUBAI/WASHINGTON, Aug 21 (Reuters) - ‌Iran said on Friday that ​its response to ​any new U.S. threats would be "devastating" after Washington pledged to impose the toughest financial penalties in history with the aim of toppling the Iranian leadership.

U.S. Treasury Secretary Scott Bessent said he would give details on Monday of the planned sanctions, after President Donald Trump warned of economic consequences against any country ‌that provided "any type of lifeline to Iran."

The chief of staff of Iran's Armed Forces, Major General Ali Abdollahi, said the Islamic Republic's reaction ⁠would be broad and decisive.

"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," Abdollahi was quoted as saying by Iranian ‌media.

Iranian leaders and Trump alike have issued triumphant ‌and threatening statements even as each side has yet to prevail in the war that the U.S. and Israel started nearly six months ago, killing thousands of people while drawing in other Gulf nations and pushing up global fuel prices.

U.S. attacks have severely diminished Iran's economy and its conventional forces, but Tehran maintains enough missile and drone ​capability to impede oil tanker traffic in the Strait of Hormuz and attack regional rivals.

AN UNPOPULAR WAR

Trump, meanwhile, has yet to achieve objectives he set at the start of the war such as dismantling Iran's nuclear programme and creating conditions for Iranians to overthrow their clerical rulers. The war has driven up gas prices and weighed heavily on ⁠his popularity, which fell to the lowest point in his current term in a Reuters/Ipsos poll this week.

Iran's parliament speaker, Mohammad Baqer Qalibaf, the country's main negotiator in mediated talks with the U.S., said Washington appeared to have concluded it ​could not prevail in its direct military confrontation.

"We must make plans to deal with the unjust sanctions so that we can overcome them," he said in neighbouring Iraq.

But, speaking to Iranian and Iraqi businesspeople late on Thursday, Qalibaf acknowledged the strain on Iran's economy.

"No ​matter how much military power we have, we won't survive if people are hungry and we don't ‌have financial turnover, economic growth and national production," Qalibaf said, according to official news agency IRNA.

OIL UP ON SANCTIONS THREAT

International and U.S. crude oil futures rose on Friday after the U.S. threatened economic sanctions on Iran's trading partners, raising expectations of tighter supply in the coming weeks.

Bessent ⁠told CNBC he would provide details on the new sanctions at a press conference on Monday, adding, "We are going to collapse this regime."

Iran has weathered near-continuous economic sanctions for nearly 50 years, since the Islamic Revolution of 1979, but its people are suffering high inflation, a weakening currency and energy shortages along with damaged infrastructure.

Tighter sanctions could have wider international implications.

Bessent said China got half its energy from ⁠the Gulf so it would make sense for them to "get with the program."

China buys more than 80% of Iran's shipped oil, according to 2025 data from analytics firm Kpler, but further U.S. economic warfare with ​Beijing, which has eased earlier restrictions on exports of its vital rare-earth minerals, risks retaliation.

China's embassy in Washington said, "Sanctions and pressure do not help resolve the problem" and called for diplomacy.

There are other risks, especially to U.S. allies in the Gulf, some of whose energy facilities and the desalination plants they depend on for drinking water have come under Iranian attack.

The U.S. and Iran have twice announced ceasefire deals, in April ‌and June, aiming to restore the free flow of ships through Hormuz, which before February carried about a fifth of all traded oil.

Iran and Oman, which lies just across the narrow strait, have been in separate talks with a stated purpose to resume navigation, but ‌the U.S. has opposed any deal that would impose a toll on ships.

NATO's top commander, U.S. Air Force General Alexus Grynkewich, convened a videoconference of allies at the chief of defence level on Wednesday to ⁠discuss ways to support freedom of navigation in the Strait of Hormuz, ‌his spokesperson told Reuters on Friday.

The spokesperson said the ​effort was not a NATO mission but given the alliance's capabilities, "it makes sense for NATO to facilitate in this way."

(Reporting by Jana Choukeir and Eman Abouhassira in Dubai and Susan Heavey in Washington; Writing Philippa Fletcher, Alex Richardson and Daniel Trotta; Editing by Gareth Jones, Timothy Heritage, Toby Chopra ‌and Cynthia Osterman)

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