The U.S. Treasury Department sanctioned ten people and entities in Iran, Hong Kong and Pakistan on Tuesday, accusing them of procuring weapons and weapon components for Iran's defense ministry as the country fights its seven-month war against the United States. The action forms part of the Trump administration's "Operation Economic Outcast" campaign, which aims to sever "critical financial lifelines" for an already heavily sanctioned government.
The sanctions came as Tehran said it had received an official U.S. response to its latest proposal to end the war. Iranian officials didn't say what the response contained or whether it was a rejection.
Diplomatic Dead End
Foreign Minister Abbas Araghchi presented the response to President Masoud Pezeshkian at a Cabinet meeting, government spokesperson Fatemeh MoHajjerani told the state-run IRNA news agency. Araghchi had just returned from New York, where he attended the UN General Assembly, held indirect talks with U.S. officials and met Qatari and Pakistani mediators.
"We will make every effort to bring the agreement to fruition and will firmly stand up for the rights of the Iranian people," Pezeshkian said. "The agreement must now be based on a win-win strategy."
Iran's proposed terms are demanding. Araghchi said last week that he had offered to reopen the Strait of Hormuz within a week if Washington lifted its blockade of Iranian ports, released frozen Iranian assets and waived sanctions on Iranian oil sales, among other conditions. Tehran is effectively asking for sanctions relief in exchange for reopening a waterway it has closed.
President Donald Trump publicly rejected the proposal days earlier. He said Iran wanted a deal because it was "losing so badly" and that its offer "would not be acceptable." On Wednesday, he told reporters in the Oval Office he would "blow them up" if no deal came soon. "It's going to end very soon, one way or the other," he said. He also denied reports by Axios and CNN, citing U.S. officials, that he was willing to offer sanctions relief and release frozen funds in return for "concrete" steps on Iran's nuclear program.
Officials said mediators are still working both sides. They spoke on condition of anonymity because they weren't authorized to comment publicly. Qatar said Tuesday it hoped shuttle diplomacy could produce a breakthrough.
The Pressure on Tehran
Iran's economy faced heavy strain before the war and has plunged further since the conflict began in late February. The rial hit a record low Tuesday, as traders in Tehran exchanged more than 2.5 million rials for a dollar. The previous low, 2.2 million, came 27 days earlier on Sept. 2. Some medicines have more than tripled in price, and the currency has lost half its value. Food and other goods cost much more. Unemployment has risen.
The source attributes the strain to a U.S. blockade of Iranian ports, in place since June, and increasingly tough sanctions. It also says Iran has tried to push global energy prices higher through attacks on regional oil-shipping routes.
Inside Iran, the state continues to respond lethally to dissent. Authorities executed two men Wednesday over their role in violence during the nationwide anti-government protests that began Dec. 28 amid anger over the collapsing currency. IRNA, citing the judiciary, said the men took part in unrest in Mashhad that left four members of the security forces dead. Demonstrators had increasingly called for the overthrow of the Islamic Republic. Rights groups say thousands were killed and tens of thousands arrested in the crackdown. Iranian authorities have reported a substantially lower death toll.
The Oil Market Reads the Talks
Brent crude futures rose 12 cents, or 0.1%, to $98.15 a barrel in early Asia trade Thursday. U.S. West Texas Intermediate fell 7 cents to $90.35. Brent gained about 14% in September, its biggest monthly rise since July.
Toshitaka Tazawa, an analyst at Fujitomi Securities, said buying continued amid supply concerns as talks stalled. Selling pressure also persisted as Middle Eastern exports showed signs of recovery. He cited Saudi Arabia's resumption of loadings from its Red Sea port of Yanbu on Tuesday after restarting its East-West Pipeline. Goldman Sachs estimated Gulf exports, including "dark exports" by ships with transponders turned off, had recovered to 23.3 million barrels per day over the previous week, in line with the 2025 average. The firm said exports doubled in September.
Why This Matters: Tehran is bargaining for sanctions relief while its own officials tie the reopening of Hormuz to it. Washington is tightening the financial squeeze on the networks that supply Iran's military. From a security-first perspective, the question is whether any deal would constrain the weapons pipeline and shipping threats, or just ease the pressure straining Iran's economy. The recovery of Saudi and Gulf exports shows that Iran's leverage over energy markets can be blunted. The same war that rattles oil prices has left Iran's currency, medicine supply and domestic stability in worse shape, and Trump's own timeline now runs past the Nov. 3 midterm elections.