NATO is considering deploying a mission to the Strait of Hormuz if the waterway remains closed by July, according to diplomatic sources. The strait has been effectively blocked since late February after Iran deployed its navy following US and Israeli air strikes against the nation. Despite a US blockade on Iranian ports, Tehran maintains a chokehold on this vital shipping lane for global oil supplies, which ordinarily sees a fifth of all oil pass through daily. Since the closure, oil prices have spiked dramatically.
Shift in NATO Strategy
The ongoing cessation of ships sailing through the waterway appears to have significantly shifted NATO's strategy regarding the Middle East. Although President Donald Trump has urgently sought international partners for his military campaign, the defence bloc has so far insisted it will only engage once hostilities cease and a broad coalition including non-NATO members can be formed. However, a diplomat told Bloomberg that the idea of sending a mission to Hormuz is gaining traction, though unanimous support has not yet been achieved. A senior NATO official added that while some member nations still oppose authorising a mission, they are likely to rally behind the plan if the blockade continues.
NATO Divisions Over Iran
The war in Iran has split NATO. Some member states, like Spain, have outright refused to engage and denied Trump access to their bases, while others have quietly allowed the US to use their bases for logistical support. Trump has lashed out at NATO allies for their refusal to participate, recently announcing the withdrawal of 5,000 US troops from bases in Germany. Trump, who considers himself an effective dealmaker, appears to have hit a wall with Iran, as tough talk, threats, and military action have not moved Tehran from its long-established positions.
US Shifts Tactics
With shifting goals making it difficult to judge the status of US efforts, Trump and his top aides have insisted the US has already won the war and that Iran is ready to reach an agreement amid escalating threats during a tenuous ceasefire. However, Trump once again backed down on Monday, saying he had put plans for an imminent resumption of attacks on hold at the request of Gulf Arab states because 'serious negotiations are now taking place, and that, in their opinion, as Great Leaders and Allies, a Deal will be made, which will be very acceptable to the United States of America, as well as all Countries in the Middle East, and beyond.'
Treasury's 'Economic Fury'
US Treasury Secretary Scott Bessent today called on allies to more forcefully disrupt Iran's financing networks and announced that the Treasury would scrub its sanctions list of outdated designations to help financial institutions root out sophisticated terrorist financing schemes. Speaking at an anti-terrorism financing conference after G7 finance leaders met in Paris, Bessent urged participants to 'stand with us in full measure' against Iran. 'That will require, for example, our European partners to join the United States in taking action against Iran by designating its financiers, unmasking its shell and front companies, shuttering its bank branches, and dismantling its proxies,' Bessent said. 'It will require those of you in the Middle East and Asia to root out Iran's shadow banking networks.'
As the Trump administration pressures Tehran to reopen the Strait of Hormuz, the Treasury has stepped up sanctions through a program dubbed 'Economic Fury,' aimed at disrupting Iran's shadow banking networks. It has frozen nearly half a billion dollars worth of cryptocurrency linked to Iran's regime. To enhance effectiveness, the Treasury will modernise its sanctions architecture because 'our adversaries adapt and innovate' by creating new shell companies. Most US Treasury sanctions target individuals and entities on the Specially Designated Nationals List, which contains tens of thousands of designees cut off from the dollar-based financial system, with assets frozen. Anyone transacting with designated entities risks being sanctioned themselves.
'To sharpen national security outcomes, Treasury is tailoring our sanctions program for the 21st century. We are reviewing outdated and obsolete designations to help financial institutions focus on the most sophisticated terrorist financing and sanctions evasion schemes,' Bessent said. He emphasised that the most effective sanctions are aggressive and targeted, and those left in place too long could create unintended consequences. 'Sanctions are meant to change behaviour, not to punish populations,' Bessent stated. 'Sanctions left in place for years with no visible and tangible changes in behaviour can have generational impacts that are nearly impossible to predict.'
The Treasury's approach will 'maintain agility to maximise effectiveness,' citing examples of easing sanctions on Syria and Venezuela after regime changes as models for how the Trump administration intends to adjust sanctions.
