Iran faces pressure from all sides

Vessels near the Strait of Hormuz, as seen from Musandam, Oman, September 2, 2026. REUTERS/Stringer Purchase Licensing Rights , opens new tab Sept 2 - It was supposed to be a fresh start. Across the Gulf, more than a million children returned to classrooms this week for the new academic year — only for the region to be jolted, yet again, by the sound of sirens. Alerts sounded in Bahrain and Kuwait early on Wednesday as Iran and the U.S. traded their biggest exchange of fire since July . For parents and students hoping this year might begin without the tension and insecurity of the ​last one, the timing could hardly have been crueler. Summer hadn’t brought the reset anyone wanted; it had simply been a pause before school, and the tension, resumed. Business as usual, in other words — ‌with duck-and-cover plans on standby. This week's newsletter tracks the fallout from that renewed conflict: Iran's central bank chief insisting reserves can withstand the sanctions squeeze, tankers dodging Hormuz via ship-to-ship transfers, and two Filipino seafarers killed aboard a Saudi vessel in the strait. Our analysis asks whether Tehran, squeezed by a draining blockade and a war flaring anew, is finally being pushed toward the deal it has so far avoided. And Last Wave revisits Trump's AI-generated threat to Kharg Island, the pixelated warning that turned out to be exactly that. NEWS BRIEFING Iran's Central Bank Governor Abdolnaser Hemmati ​said Iran had sufficient foreign currency reserves despite U.S. sanctions, offering to inject up to $2 billion to calm market volatility. His remarks followed Treasury Secretary Scott Bessent's claim that Iran, suffering record currency lows and 66% inflation, was "lashing ​out kinetically because they are losing economically". On Friday, the Treasury moved to cut off the UAE branches of Egypt's Banque Misr over its dealings with Iran, and Bessent said Washington ⁠is likely to announce further sanctions against banks this week and next. Three LNG cargoes from Qatar and the UAE were transferred ship-to-ship outside the Strait of Hormuz for delivery to India and Japan. The QatarEnergy-controlled Al Rekayyat tanker, hit by a projectile near ​Hormuz in July, transferred its cargo in mid-August to another tanker, Tembek, which delivered cargo to India's Dahej terminal on August 31. Saudi Arabia’s national shipping company Bahri said that two Filipino seafarers were killed in a security incident involving its tanker, Sidr, ​while transiting the Strait of Hormuz on August 31. Sidr was one of two supertankers carrying Saudi oil reported to have been hit that evening while transiting the waterway. Another Bahri vessel was struck near the strait a month earlier, and two have been attacked in the Red Sea. THREE-FRONT SQUEEZE: BLOCKADE, NO LIFELINE, AND A WAR THAT WON'T QUIT Xi Jinping, Vladimir Putin, Narendra Modi and Masoud Pezeshkian stood shoulder to shoulder in Kyrgyzstan this week for the Shanghai Cooperation Organisation summit, a rare gathering of Iran's most consequential partners at the exact moment Tehran is ​under economic siege. The bloc's joint declaration condemned the "military strikes on the territory of the Islamic Republic of Iran" and backed Tehran's "inalienable right" to peaceful nuclear development. The public posture was solidarity, not pressure on Tehran to cut a deal with Washington. But ​what was actually said in the bilateral sidelines — especially between Xi and Pezeshkian, given China is Iran's most important oil customer and is itself grappling with an increasingly precarious energy supply picture — is anyone's guess. I'd love to have been a fly on the wall. ‌While its ⁠public pronouncements may not convey urgency, Beijing's energy exposure is real. That gap matters more now than it might have six months ago. Reuters reported this week that for the first time on record, Iran has gone roughly seven weeks without shipping meaningful amounts of crude through the Strait of Hormuz. Washington reinstated its naval blockade on July 14. Loadings have fallen to around 240,000 barrels per day in August from roughly 2 million bpd in March. The collapse in exports is draining one of Iran's main sources of foreign-currency income and could force Tehran to finance spending by printing money, risking even higher inflation, Kpler analyst Homayoun Falakshahi said. The mechanism is different, too. Sanctions are tricky to enforce; the blockade is enabled by military power and geography. U.S. Navy ​vessels physically vet ships in the corridor between the Gulf ​of Oman and the Arabian Sea, and once a ⁠tanker sells its cargo, it can't return to Iranian ports – leaving vessels stranded outside the Gulf. That's a chokepoint no sanctions regime could replicate. Pezeshkian, for his part, used the summit's public stage to signal Tehran will "immediately reciprocate" if Washington revives June's collapsed memorandum of understanding. Tehran is now being squeezed from three directions at once: a blockade draining its foreign-currency reserves, partners offering ​solidarity but no visible economic lifeline, and a shooting war that has flared again this week. The open question is whether economic exhaustion, diplomatic isolation and renewed military risk, all ​at once, will finally push Tehran ⁠to cut a deal it has so far appeared to only offer from a podium. CHART OF THE WEEK Analysts have maintained forecasts for oil prices above $80 a barrel in 2026 as shipping disruptions linked to the U.S.-Iran conflict drive expectations of reduced supplies while weak demand in China limits the upside, a Reuters poll showed. An August survey of 31 economists and analysts forecast that Brent crude would average $85.08 a barrel in 2026 and U.S. crude $80.20 a barrel, roughly in line with July's forecasts of $85.22 and $80.14, respectively. Read more here . LAST WAVE: ⁠A PIXELATED THREAT Trump claimed ​Kharg Island had been blown to smithereens. It hadn't. The one-line post, accompanied by an AI-generated video clip, prompted a U.S. official to confirm ​the military had not targeted Kharg Island in overnight strikes. The post alone was enough to drive oil prices nearly 2% higher on Monday – proof that markets don’t wait to distinguish fact from fiction. Tehran wasn't impressed: an Iranian official dismissed Trump's post as "laughable." U.S. Vice President JD Vance offered the closest thing to an ​explanation , saying, "he's sending a message to the Iranians." The message matters because the stakes are real — Kharg handled 90% of Iran's oil exports before the war, and an attack would severely disrupt its ability to process and export crude. Edited by Aidan Lewis Our Standards: The Thomson Reuters Trust Principles. , opens new tab Suggested Topics: Middle East X Facebook Linkedin Email Link Purchase Licensing Rights