Trump Threatens "Large-Scale Attack" on Iran, Global Inflation Alarm Sounds Again

According to Zhitong Finance APP, former US President Donald Trump has stated that he is considering launching a “large-scale attack” against Iran to force the country back to the negotiating table, a move that could further drive up energy prices already straining the global economy. In an interview, Trump said he is “close to making a decision” and that the strike would be “unprecedented in scale.” The report quoted him as saying that Iran is not yet ready to reach an agreement as “the pain they have suffered is not enough.”

These remarks highlight the dilemma Trump faces—renewed hostilities have led to the breakdown of a temporary ceasefire agreement, and the Strait of Hormuz is nearly blocked. On Thursday, Trump warned via Truth Social that if Iran and the Houthi armed group in Yemen it supports attack merchant ships, they will face “significant military consequences.” This week, the Houthis claimed to have attacked a Saudi oil tanker, opening a new front in the ongoing conflict which has already pushed oil prices above $100 per barrel and raised US retail gasoline prices to over $4 a gallon.

According to international media citing Iranian and Iraqi officials, the Iraqi Prime Minister delivered Trump’s ceasefire proposal to Iran, but Iran rejected it on Thursday, dealing another blow to mediation efforts. The specific details of the plan remain unclear, according to reports.

On Thursday, the US Central Command announced it had carried out airstrikes for the 13th consecutive night, aiming to weaken Iran’s ability to attack merchant ships in the Strait of Hormuz.

Hours before the US launched the airstrikes, Trump warned that “from this moment on, any damage to ships, cargo, and related matters will be compensated from Iranian funds held and controlled by the United States.”

About $2 billion of Iranian funds are frozen in the United States, while larger sums are held in other countries and cannot be transferred due to US sanctions—estimates range from $24 billion to over $100 billion. Iranian Foreign Minister Abbas Araghchi wrote on the X platform that “seizing another country’s assets to compensate for unrelated future claims is a dangerous precedent.”

Since the US and Israel launched joint attacks on Iran in February this year, the war has entered a new escalatory phase following the breakdown of the ceasefire last month. Although the current intensity of fighting is not at its peak, Iran has threatened that if Trump follows through on the threat to “destroy a bridge or power plant for every Iranian attack on Hormuz shipping,” Iran will retaliate by attacking regional infrastructure, including energy facilities. The Strait of Hormuz, which carried about one-fifth of global energy supply before the war, now sees only minimal transit.

This week’s Houthi operations have put another maritime chokepoint—the Bab el-Mandeb Strait—under threat, and some vessels have rerouted. However, two Chinese-owned tankers carrying Saudi crude have already passed through the strait and exited the Red Sea.

As of press time, Brent crude was quoted at $99.65 per barrel, after falling as low as $70.14 on July 2. Gold extended its decline to $4,030.10 per ounce, as markets expect the Federal Reserve may tighten monetary policy to curb inflation.

Last month, Trump agreed to a temporary ceasefire, citing the risk of a global economic collapse. Facing growing political pressure ahead of the November midterm elections, the Republican Party is trying hard to retain control of Congress. Polls show the public does not support the war. The House of Representatives passed a second resolution on Thursday calling on Trump to stop the war, but it is mainly a symbolic move.

Iranian state television reported that the passenger terminal at the Shalamcheh crossing on the Iran-Iraq border was attacked, resulting in two deaths; meanwhile, Iran has continued attacking US bases in the region, including targets in Kuwait and Jordan.

The Houthis, as a member of Iran’s “Axis of Resistance,” control large areas of northern Yemen, including the capital Sana’a and the Red Sea port of Hodeidah. Since Israel began its war against Hamas in Gaza in 2023, the group has frequently harassed Red Sea shipping with drones and missiles. Trump previously ordered airstrikes against the group last year, but halted operations after a partial ceasefire was reached.