Crude oil prices climbed to a more than three-week high on Thursday as the Trump administration announced a dramatic escalation of economic pressure on Iran, with U.S. Treasury Secretary Scott Bessent referring to the “toughest sanctions in history.”

Brent futures rose $1.94, or 2.1%, to $93.56 a barrel, their highest level since July 24. U.S. September-delivery WTI gained $2.18, or 2.5%, to $88.01 a barrel, also its highest level since July 24.

The latest rally came after U.S. President Donald Trump threatened an “economic war and isolation on an unprecedented scale” against Tehran, as well as consequences for any country that continues to provide economic support to Iran.

Bessent raised the stakes further on Thursday, telling CNBC that Washington intends to impose an unprecedented regime of economic pressure on Iran.

“We have the blockade and we will impose the toughest sanctions in history,” he said. “This will work. It worked in Venezuela when we imposed the blockade. It is working in Cuba right now, and it will work in Iran, and we will bring down this regime.”

The U.S. Treasury secretary also announced that he would hold a press conference on Monday to present in detail Trump’s plan for conducting an “economic war” against Iran.

Trump had announced on Wednesday via Truth Social the “most intense economic operation ever conducted against any country,” warning that any state continuing to trade with Tehran would face economic consequences.

The warning inevitably turns attention toward China, the largest importer of Iranian crude. According to StoneX energy analyst Alex Hodes, threats against countries maintaining economic ties with Iran could develop into another sensitive front in relations between Washington and Beijing.

Bessent: Markets are misinterpreting Trump

Despite the market’s reaction, Bessent argued that investors are misinterpreting the U.S. president’s message, saying that choosing maximum economic pressure could, in his view, reduce the likelihood of renewed large-scale military operations.

“I’m not sure why oil went up on this news,” he said. “If we are exerting maximum economic pressure, then that means that there probably won’t be a resumption of large-scale military operations.”

The market, however, remains focused on the risk of further restrictions on supplies from the Middle East after nearly six months of war. U.S. and Israeli attacks on Iran, Tehran’s blockade of the Strait of Hormuz and attacks on energy facilities across the region have caused major disruptions to international oil and gas flows.

“Tensions in the Middle East remain high, leaving room for further supply disruptions,” said Giovanni Staunovo of UBS, adding that lower exports from the Middle East are tightening the oil market again.

Traffic through the Strait of Hormuz remained well below pre-war levels on Wednesday. Before the outbreak of hostilities, the critical maritime route carried volumes equivalent to approximately one-fifth of global oil consumption.

New pressure from the United Arab Emirates

The United Arab Emirates, one of Iran’s most important trading partners, are also adding pressure on Tehran, announcing the suspension of all trade, financial and economic transactions with Iran until further notice.

The decision followed the UAE’s announcement that two ballistic missiles had been launched from Iran toward its territory. Iranian Foreign Ministry spokesman Esmaeil Baghaei denied that Tehran had carried out the attacks.

The UAE move further intensifies the economic isolation of Iran, which is already facing extensive U.S. sanctions, while also further diminishing the prospects for a new ceasefire agreement.

At the same time, the war has also affected refined fuel supplies, as less crude is reaching refineries. In the United States, distillate inventories — which include diesel and heating oil — fell for a third consecutive week, according to the EIA, although crude inventories unexpectedly increased by 4.4 million barrels.

With Washington preparing to unveil its next measures against Tehran on Monday, the oil market faces a new dilemma: on the one hand, maximum economic pressure could reduce the risk of renewed military escalation, as Bessent argues; on the other, even tougher sanctions and pressure on Iran’s trading partners could further restrict available Iranian oil supplies and keep prices elevated.