US-Iran War Highlights: Oman, Iran discuss conditions to resume talks on Strait of Hormuz

Iran said on Friday that its response to any new U.S. threats would be "devastating" after Washington pledged to impose the toughest financial penalties in history with the aim of toppling the Iranian leadership.

U.S. Treasury chief Scott Bessent said he would give details on Monday of the planned sanctions, which follow a warning from President Donald Trump of economic consequences against any country that provided "any type of lifeline to Iran."

The chief of staff of Iran's Armed Forces, Major General Ali Abdollahi, said the Islamic Republic's reaction would be broad and decisive.

"With preparedness across land, sea, air, air defence and cyberspace, Iran's armed forces will respond to the enemy's new threats with crushing, punishing and devastating responses," Abdollahi was quoted as saying by Iranian media.

Iran's parliament speaker, Mohammad Baqer Qalibaf, the country's main negotiator in mediated talks with the United States, said Washington appeared to have concluded it could not prevail in its direct military confrontation.

"We must make plans to deal with the unjust sanctions so that we can overcome them," he said in neighbouring Iraq, accusing the U.S. and Israel of resorting to what he said was economic and "cognitive" warfare.

But, speaking to Iranian and Iraqi businesspeople late on Thursday, Qalibaf acknowledged the strain on Iran's economy.

"No matter how much military power we have, we won't survive if people are hungry and we don't have financial turnover, economic growth and national production," Qalibaf said, according to official news agency IRNA.

Oil prices edged lower on Friday but were on track for a second weekly gain after rising on Thursday following the new U.S. sanctions threat.

"I'm not sure why oil has popped up on this," Bessent told CNBC. "If we are doing the maximum economic pressure, then that means that likely there will not be a large-scale kinetic restart," he said, using a term referring to military force.

— Reuters

Oman’s Foreign Minister Badr bin Hamad Al Busaidi and his Iranian counterpart Abbas Araghchi held a phone conversation to discuss steps towards creating the conditions needed to restart negotiations over the Strait of Hormuz, Oman News Agency reported.

The two ministers stressed the need to continue diplomatic efforts aimed at restoring freedom of navigation through the strategic waterway and promoting regional security and stability.

An oil tanker under U.S. sanctions for allegedly transporting Iranian petroleum products has become the latest victim of resurgent Somali piracy when it was boarded off the coast of Yemen and diverted toward Somalia. The Eritrea-flagged Sibu 1 was seized on Thursday by six armed individuals, according to the United Kingdom Maritime Trade Operations (UKMTO). The tanker was sanctioned last December by the U.S. Treasury for allegedly being part of a shadow fleet that helps Iranian petroleum products evade U.S. sanctions.

The Sibu 1 was at least the 13th vessel attacked this year off the coast of Somalia or in the Gulf of Aden that links Somalia and Yemen, according to data from the International Maritime Bureau and reports by UKMTO.

There were only five such attacks in all of 2025, according to the IMB data. Hundreds of attacks by Somali pirates from 2008 to 2014 created a security crisis in the western Indian Ocean that cost the global economy billions of dollars, including hundreds of millions of dollars in ransoms.

A coordinated international security response largely ended those attacks and a spate of hijackings in 2023 and 2024 also died down following a robust naval response.

But experts say the failure to address the root causes of piracy linked to poor economic and security conditions in Somalia mean it can always re-emerge.

"The piracy was always suppressed. It was never really fully eradicated," said Timothy Walker, a senior researcher at the Institute for Security Studies in Pretoria.

Experts have pointed to impacts of the Iran war on the piracy surge, including elevated oil prices that make tankers more attractive targets and the diversion of naval assets previously focused on piracy to the Strait of Hormuz and Red Sea to deal with threats from Iran and its Houthi allies in Yemen.

Some have cited evidence of collaboration between the Houthis and Somali pirates after several vessels were seized near the Yemeni coast.

— Reuters

Iran's Armed Forces chief of staff Major General Ali Abdollahi warned that Tehran would respond with "crushing, punishing and devastating" force to new US threats. The warning came after Washington pledged its toughest-ever financial penalties against Iran.

The rupee pared initial gains and settled higher by just 3 paise at 95.71 against the US dollar on Friday, as the support from a weak dollar was negated by continued geopolitical tensions.

The dollar slipped on Friday, trading near a three-month low against the euro, as concerns mounted that the US Treasury's plan to expand buybacks of longer-dated government debt could weigh further on the US currency.

Oil prices dipped from session highs on Friday after Pezeshkian’s comments, before quickly recovering gains. Brent crude is trading around $94 a barrel.

Iranian President Masoud Pezeshkian said it was time to end the months-long Middle East war with the United States because Tehran was in a position of strength over Washington.

Talks between the decades-old foes remain on hold, with both sides in the war started by the US and Israel in February locked in a stalemate.

Tehran’s grocery stores are well-stocked, but many families can barely afford the basics. Unemployment is soaring and those with jobs are working more hours for money worth half as much as a year ago, putting food, medicine and everything else — except for heavily subsidized gasoline — further out of reach.

“We have virtually given up on many things,” said Ahmad Karimi, 52, a taxi driver and father of two who has been working 15-hour days to make ends meet. “We’re cutting out fruit, we’re cutting out protein, we’ve given up leisure, we even work on weekends."

Nearly six months into the war with the United States and Israel, the Iranian economy is taking a beating under the force of sanctions and a naval blockade that is making it extremely difficult for the country to export oil, its most valuable product.

Whether this intensifying economic pressure will translate anytime soon into military or political concessions from Iran remains to be seen — but some experts are skeptical. Since the war began, Iran has been attacking oil-rich neighbors and U.S. bases in the region, and disrupting shipping in the Strait of Hormuz, its biggest strategic advantage.

Iran is trying to use this retaliatory pressure — which is driving up energy prices globally — to bring the war to an end on the best terms possible. It is pressing for sanctions relief, and seeking enough control over the strait to demand payment from ships passing through to deliver energy and other goods.

The Trump administration — which is stuck fighting over a waterway in a war that was launched to curb Iran's nuclear program — is now promising to deliver even tougher sanctions to try to squeeze the Islamic Republic into submission. But experts say U.S. President Donald Trump may be underestimating how long Iran can hold out.

Iran has been subject to Western sanctions for years and has become deft at partially circumventing them. It has expanded domestic production, used informal cross-border trade networks, bought restricted goods through third countries, and used a shadow fleet to transport its oil.

“Iran’s resistance capacity not only avoids collapse, it also prevents the economic pain from translating into the political pressure and changes that the U.S. expects,” said Hadi Kahalzadeh, an expert on Iran’s economy at Brandeis University.

Iran's economic strains carry an ‘emotional toll’

Tehran’s sprawling Grand Bazaar is regularly packed with shoppers hoping to find more affordable staples than at the country’s grocery stores, where rice is 60% more expensive and beef is 150% more expensive than before the war.

A mother of two from northern Iran posted a photo on X this week after purchasing milk, eggs, toilet paper and a few other items, but no meat. She complained that it cost 89 million rials (about $65).

“Buying basic necessities has become our main priority, and our shopping basket has gotten smaller and more limited,” the 41-year-old told The Associated Press on condition of anonymity for fear of retribution.

“The emotional toll and the pressure we’re under are another story," she said. "Every time we have to say no to our children, every time we have to go back and forth over a decision, whether it’s a class you’d love your children to take or something they really want you to buy for them, it’s genuinely exhausting.”

By the end of the year, inflation in Iran is expected to rise nearly 70%, according to the International Monetary Fund, and the country's economy — devastated by a decade of sanctions before the war — is forecast to shrink by more than 5%.

While gasoline has remained cheap thanks to government subsidies, even that might not last forever as supplies get tighter. A presidential aide told Iranian state television last week that the country is now using more gasoline each day than it produces and may need to raise prices — something that in the past has led to widespread protests.

— AP

Iranian Parliament Speaker Mohammad Bagher Ghalibaf said the country needs to devise strategies to withstand what he called “cruel sanctions”, after US Treasury Secretary Scott Bessent announced measures described as the ‘toughest’ sanctions ever imposed on Iran, according to Ghalibaf’s Telegram channel.

“If you look at the resources and raw materials of Muslim countries, you will realise that our enemies are coming to plunder them, so we must plan for cruel sanctions in this situation so that we can overcome it,” he said.

An Israeli airstrike hit a house on the outskirts of Baraachit in southern Lebanon’s Bint Jbeil district, Lebanon’s National News Agency reported.

Offers of Iranian crude to Chinese buyers have declined and prices have jumped this week as the U.S. blockade has cut Tehran's shipments, according to Reuters citing trade sources, with the threat of more sanctions from Washington looming.

The U.S. re-imposed its blockade of Iran's shipping and ports on July 13 as a deal to halt the war between them broke down in an attempt to cut off oil sales — Tehran's primary source of hard currency — compounding earlier losses from wartime strikes on its energy infrastructure.

The number of offers for Iranian oil cargoes to China for September and October delivery has declined from July and August cargoes, four trade sources familiar with the matter said. The offers have declined as barrels already in ships on the water have been sold, they said.

Iran's oil exports have fallen since mid-July, with no visible crossings of the Strait of Hormuz by supertankers carrying Iranian crude since then, according to data from ship-tracking company Kpler, although many vessels turn off their location transponders, making them difficult to track.

The squeeze threatens a key feedstock for independent refiners, known colloquially as teapots, located in China's eastern province of Shandong, which account for about a fifth of China's refining capacity and are the top buyers of sanctioned oil.

Three of the trade sources said some Iranian crude, typically sold at discounts, was being offered at premiums to ICE Brent futures, with one source citing a premium of about $2 a barrel. That was an abrupt shift as cargoes of Iranian Light were being offered earlier this week at a discount of around $3 a barrel, the same as a month earlier.

Iranian crude held in floating storage outside the U.S. blockade zone has fallen to about 80 million barrels from about 105 million barrels before the blockade was reinstated, Kpler data showed.

Two of the sources estimated that only about 30 million barrels of Iranian crude remained in Asian waters, half of the usual levels.

Kpler Senior Crude Oil Analyst Muyu Xu estimated there are 40 million barrels of Iranian oil held on ships in Malaysian waters east of Singapore, though most of that has been promised to buyers.

— Reuters

Shipowners including Sinokor Group are helping Saudi Arabian crude exit the Red Sea via the safer northern route, as Iran-backed militants target the kingdom’s exports via the Bab el Mandeb chokepoint in the south.

Intermittent Israeli artillery shelling has targeted the outskirts of Mayfadoun, near Zawtar al-Sharqiyah, in southern Lebanon this morning, according to the country’s National News Agency.

Indian refiners' crude throughput rose 6.8% month-on-month in July to 5.62 million barrels per day (23.77 million metric tons), showed provisional government data dated August 20.

Iran on Thursday dismissed threats by US President Donald Trump of economic pain and isolation for the country.

Resilient oil prices are prompting China’s refiners to keep crude purchases below the lofty levels seen before the Iran war, even as analysts and industry consultancies estimate imports are edging back toward 10 million barrels a day.

As tensions continue to escalate between the US and Iran, with the conflict dragged on for months, President Trump reiterated the claims of destruction of Tehran's military infrastructure, while also reiterating the stance for Iran not to acquire nuclear weapons.

India's Tata Motors Passenger Vehicles will raise prices of cars and SUVs across its portfolio by up to ₹25,000 ($261.23) from September 1, the car maker said on Friday, with the extent of the hike varying by model and variant.

Japan's Nikkei share average slipped on Friday, putting it on course for its worst week in more than a month, as uncertainty surrounding the Middle East conflict lifted oil prices and fanned inflation fears.

The Nikkei eased 0.3% as of the midday recess, setting up a 4% weekly loss, the biggest since the week ended July 17.