Trump’s ‘Operation Economic Pariah’ against Iran: What the threat of sanctions could mean for India

Launching an “economic attack” on Iran, US Treasury Secretary Scott Bessent said President Donald Trump is making phone calls to world leaders with specific requests to stop all interactions with Iran.The move comes amid the ongoing conflict between the United States and Iran that has shaken the global economy and global oil markets since late February of this year. Bessent said on Monday that the new US sanctions are aimed at closing off all potential sources of income for Iran, while warning other countries that continuing their economic ties with Tehran could expose them to retaliation.He said it was “no longer acceptable to operate in the gray spaces” of the conflict.The United States has imposed sanctions on Iran for decades. These measures prevent designated entities from accessing the dollar-based financial system.Iran, however, has managed to evade the restrictions by rapidly creating new front companies and other entities, as well as registering ships under new agreements.“Iran now faces a very clear choice, with only two paths before them: complete global isolation and a subsistence economy, or a path back to normality with the opportunity to rejoin the global economy. Today, we are launching Operation Economic Pariah to exclude any other option available to the Iranian regime,” Bessent said.“Starting today, the actions of Treasury and other agencies will tighten the noose and block all potential sources of revenue that finance the IRGC and the evil Iranian regime. We are pursuing a zero-leakage approach. There will be minimal respite for the regime to rebuild its ability to inflict terror against the United States and the world,” he added.

Operation Economic Pariah: what Bessent announced

“Iran’s facilitators buy and transport its oil. They facilitate the flow of its finances through exchange houses and free trade zones. They welcome flights from Iran and maintain records on its behalf. They turn a blind eye to maritime fuel transfers and land transits. They condone illicit use of their banks, while hiding the extent of their complicity,” Bessent said, warning countries of secondary sanctions.He did not specify which countries could be subject to secondary US sanctions. However, China, Türkiye and the United Arab Emirates are Iran’s largest trading partners.“Let there be no ambiguity as to the position of the United States,” Bessent said at a news conference. “An economic engagement of any kind with this murderous regime will expose those responsible to the full extent of American power.”China buys crude oil in huge quantities from Iran. Asked specifically about possible sanctions on China, Bessent said: “We want to make clear today that no one is beyond the reach of US sanctions. We believe the best way to engage with countries is through quiet diplomacy.”The Treasury Department has also sanctioned nearly 60 entities, individuals and vessels.China has been the largest buyer of Iranian oil for several years and the United States has stepped up efforts to restrict those purchases. However, it has so far refrained from naming major Chinese banks that could be facilitating oil trade.

What could US measures mean for India’s oil imports?

India has not been importing oil from Iran due to US sanctions. However, amid the Middle East conflict, when the Trump administration waived sanctions on offshore Iranian oil to ease global crude oil prices, India also acquired Iranian crude to ease pressure on its energy security.No shipments of fresh crude oil have been picked up from Iran in recent months, and India’s diversified basket of oil purchases has meant there are no disruptions in the absence of oil from Iran.Therefore, sanctioning Iranian oil would not affect India as much in terms of supply as it would in terms of prices.China is the largest importer of Iranian crude oil. But if pressure from the Trump administration succeeds in reducing imports from China, it will look elsewhere for its supplies. This, in turn, is likely to increase global crude oil prices, which would affect India.“India’s biggest risks are higher oil prices, disruptions in the Strait of Hormuz, and the Russia-Iran Sanctions Act of 2026, passed by the US Senate on August 7 by a vote of 86 to 11. If enacted, it could authorize tariffs of up to 100% against major buyers of Russian energy,” warns Global Trade Research Initiative (GTRI) founder Ajay Srivastava.

What it could mean for India-Iran trade

It is unclear so far whether there would be any direct impact from the secondary sanctions that the United States has threatened. The five broad fields of sanctions are: digital assets, technology, gold, aviation and shipping.Indian exports to Iran decreased from $3.5 billion in fiscal 2019 to $1.2 billion in fiscal 2026. Rice represented 810 million dollars of exports, followed by tea and coffee with 82 million dollars, medicines with 63 million dollars, bananas with 54 million dollars, sugar with 48 million dollars and legumes with 34 million dollars.India’s imports from Iran have also fallen sharply, from $13.5 billion in fiscal 2019, including $12.4 billion in crude oil, to less than $375 million in fiscal 2026.Bitumen was the largest import at $138 million, followed by apples at $41 million, almonds at $36 million and dates at $35 million.Meanwhile, according to a Reuters report, Indian exporters have said that planned new US sanctions against Iran, coupled with the United Arab Emirates’ decision to suspend trade with Tehran, could disrupt Indian exports of rice, tea and pharmaceuticals to Iran. Much of this trade has passed through the port of Dubai in recent years.India remains one of Iran’s five largest trading partners, although bilateral trade has fallen more than 90% from its peak of $17 billion in fiscal 2019. Exports are now largely limited to goods that are exempt from sanctions on humanitarian grounds.Indian exporters worry that the Trump administration’s plan could put more pressure on trade that has already been weakened by sanctions, cautious banks and restrictions on shipping.Last week, the United Arab Emirates suspended all trade activities, exchanges and financial transactions with Iran until further notice.“We are already seeing signs that transactions and payment mechanisms traditionally routed through the UAE are exploring alternative jurisdictions,” said Dev Garg, vice-president of the Indian Rice Exporters Federation, suggesting Turkey as an alternative.In the first six months of 2026, India exported rice worth $383.11 million to Iran, making the country the second-largest foreign market for premium rice, including long-grain basmati.“Any prolonged disruption in this corridor will have a much greater influence on the basmati rice industry, especially millers and exporters in northern India, than on India’s overall non-basmati rice trade,” Garg said.Until recently, Indian exporters generally received payments through an Indian authorized dealer bank from the account of a UAE-based merchant. Payments were made in dirhams, dollars or other permitted currency, while the merchant received payment separately from his Iranian customer through banking channels that met legal requirements.India’s tea exports to Iran amounted to $14.34 million during the first half of 2026. Prabhat Bezboruah, a leading tea planter and former chairman of the state Tea Board, said tea sales to Iran would be affected because a significant part of the trade passes through the United Arab Emirates.