Bank Melli Iran, the country’s biggest commercial bank, has long been a linchpin of the Islamic Republic’s financial system, facilitating trade, oil revenue collection, and government transactions. For years, it has been subject to U.S. sanctions that freeze its assets and ban American entities from doing business with it. However, the latest measure—forcing every foreign branch to cease operations—represents an unprecedented tightening of the screws.

Treasury Secretary Scott Bessent made the announcement without providing a specific deadline for compliance, but the language was unequivocal. “Every foreign branch must be shut down,” he said. The order is expected to affect Bank Melli’s remaining offices abroad, which have already shrunk due to prior sanctions. Countries hosting those branches, including China, Germany, and the United Arab Emirates, may now face pressure to enforce the closures or risk secondary sanctions.

Bank Melli has historically been a key channel for Iran to conduct international business, especially in energy and trade finance. Its exclusion from the global banking system could further isolate Iran, making it harder to export oil, import goods, or access hard currency. The move comes amid a broader U.S. strategy to maximize economic pressure on Tehran, particularly over its nuclear program and regional activities.

The Iranian government has not yet formally responded to Bessent’s announcement, but past patterns suggest it will condemn the action as illegal under international law and may explore alternative financial conduits, such as barter trade or use of other countries’ banks less susceptible to U.S. pressure. The European Union and other trading partners have previously objected to the extraterritorial reach of U.S. sanctions but have often complied to protect their own financial systems.

Critics of the escalation argue that such aggressive economic warfare risks deepening humanitarian suffering in Iran, where inflation and unemployment are already high. They contend that sanctions on banks make it harder for ordinary Iranians to buy food, medicine, and other essential goods, even when those items are technically exempt. Proponents counter that only maximum pressure can force Iran to change its behavior on nuclear enrichment and regional proxies.

The closure order is likely to accelerate Iran’s move toward non-dollar trade arrangements, including bilateral agreements with China and Russia. It may also prompt other Iranian banks to become targets. The Treasury Department has not indicated whether further designations are forthcoming, but the “economic war” language used by Bessent suggests a sustained campaign.