US, Gulf states agree to squeeze Iran economically – report

The Trump administration and a number of Gulf Arab states have reportedly agreed to work to either collapse or cripple the Islamic Republic by targeting Iran’s economy.

By World Israel News Staff

The US and several Gulf governments increasingly favor intensifying economic pressure on Iran until its ruling system collapses or the Islamic Revolutionary Guard Corps is stripped of its ability to threaten neighboring countries, according to a senior regional diplomatic official cited by Israel Hayom.

The plan comes as the Trump administration gives diplomacy another chance after postponing a major attack on Iran, even while maintaining a naval blockade, economic sanctions and the threat of renewed military action.

The unnamed official told Israel Hayom that Washington and most Gulf capitals do not view the current negotiations as evidence that a comprehensive agreement is close. Instead, the official said, the talks are part of a broader effort to buy time while Iran’s economy deteriorates under the pressure of war, sanctions and restrictions on maritime trade.

“The current Iranian regime cannot be allowed to remain in place while retaining a threatening military force,” the official said.

According to the report, regional governments largely agree on the desired outcome but remain divided over the means and timetable. Gulf leaders are seeking to avoid Iranian attacks on oil installations, ports and other strategic infrastructure, while the Trump administration is attempting to prevent another sharp rise in energy prices ahead of the November midterm elections.

The official claimed President Donald Trump has kept Prime Minister Benjamin Netanyahu “behind the scenes” for now, although Israel is reportedly continuing to provide intelligence and logistical assistance. Israel could participate directly if the campaign reaches a decisive military stage, the official said. That account has not been publicly confirmed by either the White House or the Israeli government.

Trump said over the weekend that he had delayed what he described as an exceptionally large attack after receiving requests from Saudi Arabia, Qatar and the United Arab Emirates to allow more time for diplomacy.

“We were all set to go, but when the allies asked to call it off, you got to sort of say, ‘Well, let’s see,’” Trump told reporters.

Trump subsequently said negotiations with Tehran were underway and represented Iran’s final opportunity to reach an agreement addressing the Strait of Hormuz and its nuclear program.

“Whether Iran wants to admit it or not, we are, in fact, talking,” Trump said Monday.

Iran has publicly disputed Trump’s account. Foreign Ministry spokesman Esmail Baghaei said no talks with the US were taking place and no Iranian delegation had been sent to meet American representatives.

Baghaei said Tehran was instead negotiating with Oman over a temporary arrangement for the safe passage of commercial ships through the Strait of Hormuz. Iran and Oman lie on opposite sides of the waterway, which carried approximately one-fifth of the world’s traded oil and natural gas before the war.

Israel Hayom reported that indirect contacts are nevertheless continuing through countries including Pakistan, while direct communications have also reportedly taken place between Iranian Foreign Minister Abbas Araghchi and Trump’s special envoy, Steve Witkoff.

Pakistan has offered to facilitate negotiations and has sought to help Iran redirect some trade through Pakistani territory and ports. Araghchi has also worked with Oman on a mechanism to supervise tanker traffic, although disagreements remain over Iran’s role in controlling passage through the strait.

Maritime traffic remains severely reduced. Asian crude imports rose during July but remained approximately 15% below their prewar level. About 4.05 million barrels of crude per day and 608,000 barrels of refined fuel passed through the Strait of Hormuz during the month, far below normal traffic.

The US blockade of Iranian ports has also sharply reduced Tehran’s ability to export oil, its most important source of foreign currency. Iran exported close to 2 million barrels of crude and condensate per day before the first blockade but saw that figure fall below 300,000 barrels per day in May, according to shipping data cited by Al Jazeera.

Washington has continued applying financial pressure alongside the blockade. On July 15, the Treasury Department sanctioned seven people and entities accused of participating in an international weapons-procurement network supporting the IRGC.

“Treasury will continue to target and disrupt the illicit procurement networks that fund Iran’s weapons programs and war machine,” Treasury Secretary Scott Bessent said.

Iran’s economy was already suffering from years of sanctions, corruption and structural problems before the latest conflict. The war, disrupted oil exports, power shortages and restrictions on commerce have deepened the crisis.

Consumer prices during the Iranian month ending June 21 were 88.6% higher than during the corresponding period a year earlier, according to figures from Iran’s Statistical Center. Food inflation reportedly reached 134%, while households have also faced electricity cuts, unaffordable medicine, job losses and a collapse in purchasing power.

Iranian media have described the situation as a “survival economy,” with families selling clothing, electronics and other possessions or renting out computers and basic tools to raise cash. Retirees have also reported that pensions no longer cover essential living expenses.

Former Iranian Foreign Minister Mohammad Javad Zarif has warned that continued confrontation with Washington could further isolate Tehran, including from governments it considers strategic partners.

“Contrary to expectations, Russia and China neither became Iran’s allies nor provided meaningful assistance during the two wars,” Zarif wrote.

Zarif argued that Iran should use its influence over the Strait of Hormuz as leverage in negotiations rather than keep the waterway closed indefinitely. A prolonged disruption, he warned, could produce an international consensus against Tehran that includes China.

Arab Gulf StatesIranIran war