US Treasury Secretary Scott Bessent on 2 September declared that Iran is trapped in an economic 'death spiral', asserting that Washington — not Tehran — controls the Strait of Hormuz, and that sustained financial pressure combined with targeted military strikes will ultimately compel Iran to return to the negotiating table. Bessent made the remarks to reporters following the G20 finance ministers' meeting in Asheville.

US Asserts Control of the Strait of Hormuz

Bessent flatly rejected suggestions that Iran had succeeded in closing the strategically critical waterway. 'Iran does not have control of the Strait, and they are in a death spiral. We have control of the Strait,' he said. He noted that approximately 17 million barrels of crude oil had transited the waterway the previous day as evidence that Iranian interdiction efforts had failed.

The Treasury Secretary confirmed that the United States had conducted limited strikes targeting radar equipment Iran was attempting to reconstruct along the Strait — a detail that underscores the active, if constrained, military dimension of the ongoing standoff.

Currency Collapse and Fuel Shortages Signal Economic Strain

Bessent pointed to Iran's currency as the starkest indicator of its deteriorating finances. The Iranian rial, he said, had weakened from roughly 800,000 to the dollar some 16 months ago to approximately 2.1 million to the dollar — a collapse he described as evidence that Tehran has been effectively cut off from international foreign exchange markets.

He also cited domestic fuel shortages and lengthy queues inside Iran as visible signs of economic stress, noting the paradox of a country sitting atop some of the world's largest energy reserves struggling to supply its own population. 'That just means that they have no access to dollars and that they are in the death throes,' Bessent said.

Washington Targets Iran's Dollar Access and Renminbi Channels

A central pillar of the US financial strategy, according to Bessent, is severing Iran's ability to convert payments received in Chinese renminbi (RMB) into dollars. He described a circuit in which Chinese entities pay Iran in RMB, which then flows back into the Gulf region for conversion — a channel Washington is now actively disrupting.

'The Chinese pay the Iranians in RMB. The RMB comes back to the Gulf region,' he said, adding that the US is targeting banks, cash houses, and supply networks involved in those conversions. Bessent referenced action taken the previous Friday against a bank in Dubai, though he declined to name the institution. 'So when that money cannot be converted to dollars, then the regime will starve,' he said.

Three Possible Outcomes, Washington's Prediction

Bessent outlined three scenarios he said the mounting pressure could produce: fractures within the Islamic Revolutionary Guard Corps (IRGC), a popular uprising against the leadership, or Iran returning to direct negotiations with Washington. 'At a point, either the IRGC are going to turn on each other, the people are going to turn on them, or they're going to come to the table and want to do a deal that they can stick with,' he said.

He also said President Donald Trump believed a prior memorandum of understanding had collapsed because Iran was not genuinely prepared to reach an agreement. Bessent acknowledged the possibility of further Iranian military action as pressure mounts — 'Will they lash out more kinetically? Maybe, but they will be ready for a deal' — but maintained that Iran's financial deterioration would ultimately shift its calculus.

Background: Sanctions and the Stakes at Hormuz

The United States has imposed successive rounds of sanctions on Iran's oil industry, banking system, and government institutions, targeting Tehran's nuclear activities, ballistic missile programme, and support for armed groups across the Middle East. The Strait of Hormuz — connecting the Persian Gulf with the Gulf of Oman and the Arabian Sea — carries a substantial share of global oil and liquefied natural gas shipments, making any sustained disruption a material risk to world energy markets. The standoff over the waterway has drawn renewed attention to how economic coercion and military posture intersect in one of the world's most consequential chokepoints.