Regional
War weighs on Iran’s economy as US intensifies sanctions
Iranian leaders are acknowledging the economic toll of war with the U.S., with the supreme leader urging the government to address the hardship and the president saying foreign trade has shrunk by a third due to the American sanctions and blockade.
Yet Tehran signalled no retreat on Saturday, vowing to withstand U.S. pressure, pursue diplomacy and maintain what it said was control over the Strait of Hormuz, the strategic waterway giving Iran leverage through its ability to disrupt global energy markets, Reuters reported.
The government said in a statement on state media that addressing economic pressures caused by sanctions and war was a central focus, including curbing inflation, managing markets, creating jobs, directing investment towards domestic production and gradually reducing dependence on the dollar.
Six months after the U.S. and Israel launched the war, negotiations are at an impasse and President Donald Trump’s administration has stepped up efforts to punish Iran financially with what it has billed as an “economic D-Day”.
SANCTIONS COMPOUND TOLL ON IRAN’S ECONOMY
Washington has warned countries to cut business ties with Iran or face secondary sanctions, though the Treasury Department stopped short of imposing penalties against major Iranian trade partners such as China and India, which could have repercussions for the U.S. and global economies.
The Treasury imposed sanctions on Egypt’s Banque Misr for doing business with Tehran, proposing a rule that would cut off the bank’s branches in the United Arab Emirates from dollar transactions.
Egypt’s central bank said it and the foreign ministry were in contact with U.S. officials concerning the matter, adding the measure was limited to Banque Misr UAE’s U.S. dollar transactions with correspondent banks only.
Banque Misr said on Saturday it was reviewing the U.S. Treasury notice, adding that its branch in the UAE continued to provide banking services to its customers.
The U.S. has also issued sanctions targeting an entity based in Hong Kong and a person linked to Iran’s Bank Melli, according to a notice on the Treasury website.
The sanctions drive compounds the toll of the war on Iran’s economy, where annual inflation hit 66% last month.
Supreme Leader Ayatollah Mojtaba Khamenei — who has not been seen publicly since he was injured in the initial February 28 attack that killed his father and former Supreme Leader, Ayatollah Ali Khamenei — called on the government to tackle the economic hardship.
“There is the need to seriously address the chain of economic and livelihood challenges, such as inflation, unemployment, management of prices and the market for goods and services,” he said, according to a written statement attributed to Khamenei.
President Masoud Pezeshkian told state media that Iranian exports and imports had slumped nearly 35% because of U.S. sanctions and a naval blockade of Iranian ports.
But he said Iran was able to sell about 90 million barrels of oil during the short-lived memorandum of understanding that the U.S. and Iran signed in June, when Washington permitted Iranian oil sales.
Later on Saturday, Pezeshkian called on state TV for a revival of the interim deal, which was signed on June 17 but quickly unravelled amid disagreements over what had been agreed, especially on the status of the Strait of Hormuz.
“We can solve our problems and gain our privileges with the memorandum of understanding,” he said of a document that had offered Iran, among other things, immediate relief from U.S. sanctions and the release of its frozen assets.
IRAN VOWS TO PURSUE DIPLOMACY AND DEFENCE
With the U.S. focused on its economic pressure campaign, others have sought to revive diplomatic efforts to end the war.
Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani met with Iranian leaders in Tehran on Thursday. He said he had stressed during the meeting the importance of returning to the pre-war status of open shipping through the Strait of Hormuz.
Iranian Foreign Minister Abbas Araqchi on Friday described the talks with Al Thani as “creative”.
In Saturday’s statement, Iran said diplomacy and defence were “two complementary, coordinated and inseparable wings” for protecting the country’s national interests, security and territorial integrity. It said it would pursue both tracks in a balanced manner.
Qatar, a U.S. ally and Gulf neighbour to Iran, and Pakistan helped broker the June memorandum of understanding.
Before the war, the Strait of Hormuz carried 20% of the world’s oil and LNG. U.S. military commanders say American forces have cleared sea mines from the strait that had been laid months ago by Iran’s Islamic Revolutionary Guard Corps.
Trump has repeatedly said the strait is open, but the Revolutionary Guards’ navy said in a statement that such claims “are an obvious lie”, reiterating that the waterway remained closed to ships without Iranian permission.
Regional
Gulf states call off meeting with Iran, Houthis launch new attack on Saudi
Arab states in the Gulf called off a meeting with Iran planned for Monday, while Yemen’s Houthis launched a new attack on Saudi Arabia after fighting that has extended the Middle East war to another theatre and further jeopardised global oil supplies.
The Iran-aligned Houthis in Yemen said they fired dozens of missiles and drones on Monday at a Saudi military airbase in Khamis Mushait, near the border, hitting aircraft hangars, radar systems, runways and ammunition depots. They described the attack as retaliation for hundreds of Saudi airstrikes on Yemen in recent days, Reuters reported.
Saudi authorities announced brief emergency alerts there and in three other southern cities which have previously come under Houthi fire.
The Houthis launched a lightning advance last week in Yemen, culminating in the seizure of an island in the mouth of the Red Sea on Friday. A separate attack that day, which Riyadh blamed on Iran-backed fighters in Iraq, knocked out Saudi Arabia’s east-west pipeline, the main route for Middle East oil bypassing the blockaded Strait of Hormuz.
OIL PRICES JUMP
Crude oil prices rose more than 3% on Monday, when the market reopened after the weekend, while the politically sensitive average retail price of diesel in the United States hit a new all-time high above $6.23 a gallon.
Traders say the closure of the Saudi pipeline could cut off as much as 4% of global oil supply unless it is reopened within days. Images from space show sections of the pipeline damaged by blazes. Riyadh has not given a firm estimate for how long it will be shut.
Oman had been due to host a meeting on Monday with Iran and Gulf states to discuss negotiations aimed at reopening Hormuz, the world’s most important oil shipping lane, largely closed since the U.S. and Israel attacked Iran at the end of February.
But Oman’s Foreign Minister Sayyid Badr Albusaidi announced overnight that the meeting had been postponed “in the interests of consensus”. Iran said the postponement was at the request of Saudi Arabia.
Meanwhile, Iran issued a list of 77 ships it said had violated its protocols for operating in the Strait of Hormuz. Any ship on the list would face “restrictions on future passages, including fines, detention, or confiscation”, and other ships that assisted them by accepting transfers of cargo would be added to the list.
EXPANSION OF WAR TO YEMEN POSES DILEMMA FOR TRUMP
The upsurge of fighting in Yemen poses a dilemma for Washington, which is under pressure to aid its Saudi allies but anxious not to expand the costly war to a new theatre.
Saudi Arabia has led an Arab coalition battling the Houthis for more than a decade, after the mountain fighters captured Yemen’s capital in 2014. The war there had largely been quiet under a ceasefire for the past few years, but fighting has now resumed, with the Houthis driving back forces from a Saudi-backed government based in the south.
Thousands of Yemenis have fled inland from the coast to escape fighting as the Houthis swept into cities including the historic Red Sea port of Mocha last week.
Aisha Muhammad, an elderly woman burning twigs to heat a kettle in government-held territory near Taiz, told Reuters she had left behind two daughters and three sons who had been unable to escape.
“They can’t even go out to the market to get food and drinking water. They are being blocked and shot at, so they are trapped inside their homes,” she said. “They cannot reach us, and we cannot return to them. This is a trial from God.”
On Friday the Houthis captured Perim Island, inside the Bab el-Mandeb, the “Gate of Tears” strait, at the mouth of the Red Sea.
U.S. President Donald Trump is under pressure to end the war to relieve the global energy shortage and lower prices that are hurting the fortunes of his Republican Party ahead of mid-term elections in November.
Three sources have told Reuters that Washington has so far rebuffed pleas from Saudi Arabia’s Crown Prince Mohammed bin Salman to intervene in Yemen. Trump confirmed over the weekend that he had spoken to the prince, and said the Houthis had also phoned asking Washington to keep out of the dispute.
The United States bombed the Houthis in 2025 for two months, but Trump called off that campaign after reaching a ceasefire with the group, which he said had promised not to attack ships in the Red Sea.
Trump, who attended a golf tournament at one of his resorts in Ireland, said he expected the Iran war to end shortly after the elections in November, after which the price of oil would “drop like a rock”.
Regional
Hormuz shipping traffic remains below 10-day average at weekend, data shows
A U.S. blockade of Iran-related shipping has halted Iranian crude oil exports since it was reimposed in mid-July.
Commodity vessel transits through the Strait of Hormuz fell to a single digit per day at the weekend, preliminary shiptracking data showed on Monday, well below a 10-day average of 14, Reuters reported.
Over the weekend, four vessels exited the Gulf through the strait, including a Handysize vessel sailing in ballast, a Handy vessel carrying LPG, a Supramax carrying fertilizer and a Suezmax laden with crude or condensate.
Ten vessels entered the Gulf, including a mini-bulker carrying minor bulk commodities, a Handymax carrying grain, a Panamax carrying metals and a Supramax carrying dry bulk cargo, the data showed.
The figures exclude any vessels that might have crossed the strait with their Automatic Identification System transponders turned off to avoid detection.
A vessel was struck by an unknown projectile while transiting the Strait of Hormuz, the United Kingdom Maritime Trade Operations said early on Sunday.
It said the crew’s status, damage assessment and environmental impact were unknown.
Meanwhile, the vital East-West oil pipeline in Saudi Arabia, which has helped relieve the logjam in the Strait of Hormuz, was temporarily shut down by a drone attack coming from Iraq, Saudi officials said.
Before the Iran war started on February 28, the strait typically handled about 125 large, commercial vessels per day, including tankers, gas carriers, bulkers and container vessels, accounting for some 20% of the world’s daily crude oil and liquefied natural gas supply, read the report.
A U.S. blockade of Iran-related shipping has halted Iranian crude oil exports since it was reimposed in mid-July.
In the Bab el-Mandeb strait, 24 and 27 commodity vessels travelled through respectively on Saturday and Sunday, tracking data showed, compared with an average of around 27 ships over the last 10 days.
Regional
Iran and UAE back joint BRICS statement urging restraint in war
Summit organisers and diplomats have been focused on bridging the Iran-UAE divide, even as the United States and Iran resume tit-for-tat strikes in the six-month-old war.
Iran and the United Arab Emirates signed up to a joint statement from the BRICS group of nations that called for restraint in the Middle East war on Saturday, in what was seen as a sign of diplomatic progress between the countries divided by the war, Reuters reported.
Iranian President Masoud Pezeshkian also met the Crown Prince of Abu Dhabi on the sidelines of the first day of the New Delhi summit, in the countries’ highest-level meeting since the start of the conflict.
The two leaders discussed regional and international issues, de-escalation, stability, and efforts to advance regional peace and development, the Abu Dhabi media office said on X, without referring to any resolution to the discussions.
The BRICS summit is a test of the diplomatic clout of a bloc set up in 2009 to challenge a world order dominated by the United States and its Western allies. It originally comprised Brazil, Russia, India, China and South Africa and expanded to include Egypt, Ethiopia and Indonesia as well as Iran and the UAE.
Summit organisers and diplomats have been focused on bridging the Iran-UAE divide, even as the United States and Iran resume tit-for-tat strikes in the six-month-old war.
Iran has launched repeated attacks on the UAE during the conflict, most recently in late August when it targeted the Al Minhad Air Base that housed U.S. forces and helicopters.
“We express deep concern over the continued escalation of tensions in Middle East/West Asia … call for exercising maximum restraint, as well as avoiding actions that could further aggravate the situation,” the joint BRICS declaration read.
It called for the protection of civilians, urged respect for the sovereignty and territorial integrity of states, and stressed the need to protect global trade, supply chains, energy flows and maritime security.
Foreign policy experts had said the key test for the bloc would be finding language on the Middle East crisis that both Abu Dhabi and Tehran could accept, clearing the way for the joint declaration.
Such a joint statement was unlikely to influence the current geopolitical landscape, but would demonstrate unity by a grouping of emerging nations, they said.
The Iranian embassy in India posted a photo of the meeting between its president and Abu Dhabi Crown Prince Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, the eldest son of the president of the country and the next in line to succeed him, read the report.
But it did not say anything about what they discussed.
“The key to ending the war lies with the U.S. and Israel,” Sunjay Sudhir, a former Indian ambassador to the UAE, told Reuters.
“What India has done is keep the difficult conversations going, by showing that countries of the region can sit at the same table, engage diplomatically, and build on where their interests converge.”
Host India’s Prime Minister Narendra Modi said that the bloc had come of age and it was time to translate its unity and consensus into concrete results on the global stage, as he opened the meeting.
The BRICS bloc is seeking to raise its profile by influencing international rules and demanding the reform of institutions such as the World Bank, International Monetary Fund and World Trade Organization, which some members view as being dominated by Western powers.
Leaders attending the summit include Russia’s Vladimir Putin, China’s Xi Jinping and South Africa’s Cyril Ramaphosa.
Chinese President Xi said BRICS countries should firmly stand on the right side of history by steering the international order toward greater equity and justice.
Xi also said China was ready to play its “due role” in achieving peace and stability in the Middle East.
“Relevant parties must remain committed to a political settlement and work towards achieving a permanent and comprehensive ceasefire,” he said, according to state broadcaster CCTV.
New Delhi, which has strong ties with the United States, Russia, Israel, Iran and the Gulf Arab states, is engaged in a diplomatic balancing act, with Modi pushing BRICS members to boost trade cooperation, reduce barriers and expand business opportunities.
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