• Treasury Secretary Scott Bessent said he cannot predict how long the Iran conflict will last, underscoring the gap between U.S. hopes for a negotiated end and an expanding, economically disruptive war.
  • Brent crude hovered near $104 per barrel and U.S. gasoline averaged $4.32 a gallon, as fighting spreads to Yemen and threatens key maritime chokepoints.
  • New sanctions on Russia’s VTB Bank (VTBR.ME) aim to tighten the financial noose on Iran, but the strategy risks complicating ties with China and Gulf partners.

No End in Sight

Treasury Secretary Scott Bessent’s admission that he cannot say how long the Iran conflict will last has laid bare the disconnect between Washington’s stated hope for a negotiated settlement and the reality of a war that is widening across the Middle East. In remarks to CNBC, Bessent offered no timeline, a day after President Trump said the United States was “hopefully” nearing the end of its nearly seven-month war with Iran and claimed Tehran wanted a deal. But ceasefire efforts remain stalled, and fighting is spreading through Yemen, where Iran-aligned Houthi forces have escalated attacks on Saudi targets and sought influence over the Bab el-Mandeb Strait, a vital maritime chokepoint linking the Red Sea and Gulf of Aden.

The White House is preparing discussions with Gulf Cooperation Council leaders around the U.N. General Assembly, including possible postwar arrangements, according to people familiar with the matter. Yet the conditions for any settlement remain unclear, and the conflict shows no sign of abating. "We are focused on using every tool at our disposal to pressure Iran," Bessent said, defending the administration’s strategy of combining military pressure with broad financial sanctions.

Sanctions as War Instrument

On the financial front, Treasury sanctioned Russia’s state-controlled VTB Bank, alleging it helped Iran evade sanctions through correspondent relationships with sanctioned Iranian banks. The move was part of “Operation Economic Outcast,” Washington’s campaign to isolate Iran economically. Treasury says its sanctions program targets parties providing material, technological, or financial support to Iran, and the VTB action followed Bessent’s earlier promise that a “large bank” would be sanctioned.

Analysts questioned the incremental impact of the new action, given VTB was already subject to prior U.S. sanctions. The designation could also create secondary-sanctions exposure for institutions dealing with VTB’s Shanghai operations—a sensitive point because China is Iran’s leading oil buyer and trading partner. Treasury declined to comment on potential secondary effects. Russia’s VTB did not respond to a request for comment.

Consumers Feel the Pinch

The economic toll is mounting. Brent crude traded around $104.28 per barrel and WTI about $101.30 on September 17, even after falling on reports of alternative Saudi export arrangements. U.S. regular gasoline averaged $4.32 a gallon as of September 14, up $1.14 year over year, while diesel was $6.23, up $2.54.

A drone attack damaged Saudi Arabia’s East-West crude pipeline, prompting its shutdown. Saudi Arabia arranged additional shipments through Oman’s Sohar port, but the pipeline is a strategic alternative to exports through the Strait of Hormuz, so disruption increases supply and shipping risk. One analyst cited by CNBC warned that export-terminal stockpiles could run out unless the line is restored within days.

The pain extends beyond oil. The U.S. 10-year Treasury yield traded around 5%, and the average 30-year fixed mortgage rate had exceeded 7% the previous week, compounding already high borrowing costs. “Higher diesel prices ripple through food and goods prices,” noted one energy economist, speaking on condition of anonymity. Farmers, truckers, airlines, and lower-income households are among the hardest hit, as fuel and transport costs consume a larger share of income.

Political Fallout and Global Risks

The conflict has sharpened debate in Washington over whether sanctions and military operations are reducing longer-run risks or extending the crisis while raising the cost of living. During Bessent’s congressional appearance, Democrats focused on gasoline prices and consumer borrowing costs, while protesters objected to U.S. sanctions on Iran and Cuba—illustrating that opposition is not confined to partisan lawmakers.

Internationally, the VTB designation tests whether Washington can increase pressure on Iran without substantially disrupting relations with major external economic partners, particularly China. Gulf states face immediate security and energy-export consequences, while also becoming essential partners in any ceasefire or postwar settlement. If negotiations fail, analyst Michael Feller of Geopolitical Strategy said the war could continue until late 2028 or beyond—a scenario, not an official forecast.

For now, the central market question is whether alternate routes, stockpiles, and emergency shipping arrangements can offset disrupted Gulf exports. They may soften an immediate shortage, but they do not remove the risk of more infrastructure attacks or an interruption at maritime chokepoints. The combination of oil above $100, high Treasury yields, and mortgage rates above 7% underscores that risk.

Correction: An earlier version misstated the date of the U.S. campaign’s start. The current phase began on February 28, according to CNBC.