Latin America’s Oil Money and the US Squeeze on Iran
The United States has announced a sweeping economic offensive against Iran called 'economic D-Day'. Oil prices jumped and Iran's currency hit a record low on informal markets. The post Latin America’s Oil Money and the US Squeeze on Iran appeared first on The Rio Times .
On August 24, 2026, the United States announced a new economic offensive against Iran, dubbed the "Iran economic D-Day." President Donald Trump stated that the initiative targets any country that aids Iran, including through the purchase of its oil. Treasury Secretary Scott Bessent promised "the harshest sanctions in history," though no formal sanctions document had been published by that date.
The announcement builds on years of US pressure to isolate Iran’s economy. Latin American countries, which have trade ties with Iran, need to watch for secondary sanctions enforced by the US Treasury’s Office of Foreign Assets Control (OFAC). Smaller trade volumes still carry risks, as even minor deals could trigger penalties. For instance, Iran had blacklisted 45 tankers, warning of fines and seizure.
Higher oil costs from the sanctions could feed into inflation across the region, affecting ordinary citizens. Iranian officials threatened that no oil would leave the Persian Gulf, and all Gulf oil exports could be blocked if the economic war continues. While no formal closure of the Strait of Hormuz has been announced, the threat is a new tool for leverage.
Oil prices reacted to the announcement, rising through the week and then easing on August 24. Brent settled at $93.17 per barrel on that day, down 1.29% from the previous session. The price level is high for consumers but a windfall for oil exporters like Brazil and Colombia, which see more revenue from each barrel sold. However, the subsequent drop on Monday showed uncertainty among traders awaiting concrete action from Washington.
The 'Iran economic D-Day' adds a geopolitical premium to oil, which could fluctuate based on developments in Tehran. Iran's rial fell to about 2.02 million per dollar on informal markets, an all-time low, reflecting market fear and uncertainty about future sanctions. Higher oil prices benefit net oil exporters like Brazil, Colombia, and Guyana, while net importers face higher inflation and fuel bills. Venezuela and Ecuador may also gain from the reference price, but sanctions and production limits limit their benefits.
The economic D-Day raises risks of US secondary sanctions on Latin American banks, shippers, and traders dealing with Iran. While no specific Latin American companies are listed yet, Brazilian state oil company Petrobras could see higher earnings, but also higher costs for imported diesel and derivatives. For importers like Chile and Peru, fuel costs directly impact consumers, potentially requiring subsidies or price adjustments to avoid social unrest.
Investors in Latin America face a double-edged sword: export sectors may see strong earnings, while importers and consumers encounter cost pressures. Higher oil prices could strengthen currencies like the Colombian peso and Brazilian real, but inflation could prompt central banks to raise interest rates. Monitoring shipping insurance premiums for Latin American routes is also crucial, as higher premiums could eat into trade profits.
The 'D-Day' remains a threat rather than a fully enforced program, with Iran's next moves in the Strait of Hormuz being critical. Any disruption to tanker traffic could further spike oil prices. Latin American governments and companies should prepare for various scenarios, including higher oil prices, currency fluctuations, and shipping costs. Monitoring the official Treasury/OFAC announcement for legal details will provide clearer guidance on potential impacts.
Written by urgent.news from The Rio Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
