Bessent's Remarks

US Treasury Secretary Scott Bessent said on Tuesday that the Strait of Hormuz could effectively be bypassed within two years, potentially making the strategic waterway "worthless." Speaking on the sidelines of a gathering of global finance chiefs in Asheville, North Carolina, Bessent said, "That will be bypassed in two years," and added, "In two years, the Strait of Hormuz will be like a worthless piece of water."

Bessent attributed the potential decline to oil pipelines providing alternative routes for Persian Gulf energy shipments. The waterway is a crucial route for oil exports from Saudi Arabia, Iraq, Kuwait, UAE and Iran, and any prolonged disruption could push up global energy prices and add to inflationary pressures.

Sanctions Strategy

Bessent outlined a series of measures Washington is considering to increase economic pressure on Tehran. He said the US would likely announce sanctions against another bank this week and an additional bank next week. He also said Washington would examine airline leasing companies linked to Iran.

According to a report by Moneycontrol, Bessent told Reuters on Sunday that the US Treasury Department is likely to unveil weekly new secondary sanctions aimed at increasing economic pressure on Iran, with an initial focus on banks. After imposing penalties on the United Arab Emirates branches of Egypt's Banque Misr on Friday over alleged financial links to Iran, Bessent said the next step may be cutting off an institution entirely from the dollar-based financial system.

Last week, the US targeted branches of Egypt's Banque Misr in the UAE over their business dealings with Iran. Bessent said Washington deliberately avoided sanctioning the parent bank in Egypt, explaining, "We did not sanction them because we did not want to go back to the Egyptian parent."

China's Role

Bessent said the United States has held private discussions with China over Iran, and that he had held private discussions with Chinese officials about Iran during the G20. China remains a key focus, as more than 90% of Iranian oil exports go to China. Bessent's comments point to Washington's effort to pressure China over its economic ties with Iran.

Military Escalation

The remarks come amid renewed tensions between the United States and Iran, with the two sides exchanging strikes on Monday. On Sunday, the United States carried out strikes on an Iranian island in the Strait of Hormuz, with Tehran quickly retaliating by attacking US military targets in the Middle East. On Monday, Trump threatened to hit Iran "hard" after the two foes traded fire for the first time in weeks.

Two oil tankers attempting to leave the Strait were struck by projectiles late on Monday, according to maritime security consultant Marisks.

Tehran has imposed an effective blockade of the strait since the United States and Israel launched their war in late February, according to a report by Moneycontrol. It says it wants to charge fees for passage and has attacked ships it accuses of attempting to circumvent its preferred route through the waterway. In response, the United States has imposed a rival blockade of Iranian ports.

Outlook

Bessent defended the effectiveness of sanctions, saying, "When everyone says, 'Well, sanctions don't work,' I can tell you, sanctions plus a blockade work." He added, "We are burying the head of the Iranian snake," and "The snake doesn't know it's dead yet, but it will stop wiggling when the sun goes down."

Iran's control over the strait has become a central issue in the conflict, and the waterway remains a critical energy chokepoint, with disruptions to shipping sharply affecting Iranian oil exports.