By Dov Lieber and Zvi Smith
TEL AVIV -- The U.S. and Israel have a set of targets lined up in Iran designed to cripple the country's economy and ensure the regime's recovery from this war is long and painful.
Israel is awaiting authorization from Washington this week to begin striking Iran's energy facilities, an Israeli official said, potentially undermining output in one of the world's major oil-and-gas producers. In a Wall Street Journal interview, President Trump said Sunday the U.S. was prepared to hit all of Iran's bridges and power plants, creating enough damage that it would "take 20 years to rebuild, if they're lucky, if they have a country."
Striking the underpinnings of Iran's economy would mark an escalation in the five-week-long war that is aimed at forcing Tehran to give up the economic leverage it has gained by slowing traffic through the Strait of Hormuz -- the waterway through which 20% of the world's oil flows. Trump has set a deadline of Tuesday evening for the strait to be opened.
Israel and the U.S. have already begun stepping up attacks on nonenergy targets in recent days, including hitting Iran's biggest steel and petrochemical factories and a landmark bridge.
"They are signaling, we're serious, and if you will continue not to agree to end the war, the price you'll pay to your economy is gonna be higher and higher," said Avner Golov, a former Israeli national-security official and now vice president at MIND Israel, an advisory group.
Attacking civilian infrastructure risks violating international law. U.S. and Israeli officials have said they are legitimate targets because they produce material used by Iran's military.
The shift toward infrastructure targets risks turning the conflict into a war of economic attrition.
The Islamic Revolutionary Guard Corps vowed it would step up attacks on civilian infrastructure in Israel and the Persian Gulf states should Trump carry out his threats.
It has already retaliated for attacks on its infrastructure by hitting petrochemical facilities in Bahrain and Abu Dhabi and striking oil, desalination and power infrastructure in Kuwait. On Sunday, Iran hit the Neot Hovav industrial zone in southern Israel, which houses several factories. Days earlier, Israel's largest oil refinery in Haifa was hit by debris from an Iranian missile but didn't halt production at the site, Israeli authorities said.
"Your reckless moves are dragging the United States into a living HELL for every single family, and our whole region is going to burn because you insist on following Netanyahu's commands," Iran's parliamentary speaker, Mohammad Bagher Ghalibaf, wrote in an X post on Sunday after Trump's threats.
Iranian attacks on Gulf energy could have a long-lasting impact on global energy prices. Oil prices have risen to their highest levels since 2022 and threaten to keep rising as tankers remain trapped in the Persian Gulf.
Mediators are racing to bring Iran to the negotiating table with the U.S. without success, officials familiar with the matter said. Iran has rejected offers to open the Strait of Hormuz in exchange for a temporary cease-fire, they said.
Iran for now appears prepared to risk further economic pain as long as it can continue to inflict pain on its enemies, said Raz Zimmt, director of the Iran program at the Tel Aviv-based Institute for National Security Studies.
"They are ready to take the risk," Zimmt said.
Even if Iran gives up control of the Strait of Hormuz, nothing will be able to get out of the Gulf if petrochemical and other energy facilities are seriously damaged, said Robin Mills, chief executive of Qamar Energy, a Dubai-based consulting firm.
"Even if we get back to normal transit, some of that five million barrels a day of refined materials sourced from the Gulf will be lost for months, possibly even longer," Mills said.
Israel and the U.S. are taking aim at an Iranian economy that is already hobbled by years of Western sanctions over its nuclear program, its ballistic-missile development and support for U.S.-designated terrorist groups. The war has driven economic activity down to new lows, residents said.
In interviews, several Iranians said food prices have soared and unemployment has risen as factories shut down after bombings. They said they worried the war wouldn't bring down the Islamic regime -- which killed thousands of protesters earlier this year -- and would only hurt the regular people that Trump and Israeli Prime Minister Benjamin Netanyahu have called on to overthrow the government.
The Israeli attacks on economic assets have focused on steel, petrochemical and pharmaceutical facilities, which combined represent billions of dollars in revenue for Iran.
On Saturday, Israel struck Iran's flagship petrochemical complex in Mahshahr, which the Israeli military said was responsible for producing and exporting chemical materials to the regime's armed forces. Last week, Iranian state media said petrochemical plants in Tabriz were attacked.
The petrochemical industry is a pillar of the Iranian economy, generating about 25% of total nonoil export revenue, said Neil Quilliam, an energy expert at Chatham House, a think tank. Unlike oil, which is easy to monitor and sanction because it travels in big ships, petrochemical products can be marketed to a range of private buyers, especially across Asia and Turkey, and are a crucial source of foreign currency for Iran, Quilliam said.
"These facilities supply essential raw materials for sectors such as textiles, automotive parts and packaging, creating production bottlenecks, higher costs and job losses across the manufacturing base," Quilliam said.
Iran's petrochemical industry has brought roughly $18 billion to the Islamic Revolutionary Guard Corps in the past two years, Israeli Defense Minister Israel Katz said Sunday.
Last week, Israel struck at the heart of Iran's steel industry, hitting the Khuzestan Steel plant in the city of Ahvaz and the Mobarakeh Steel plant in the city of Isfahan, two of the largest steel-production sites in the region.
Iran's metals sector generates several billion dollars in revenue annually, with the majority coming from steel exports, the Treasury Department said in a 2024 statement about Khuzestan Steel. Both steel-production sites are sanctioned by the U.S. for their connections to Iran's security services.
On Tuesday, Israel's military said it struck the Tofigh Daru pharmaceutical factory in Tehran.
Iran has received some economic benefits from the war, including the ability to continue exporting its oil at high prices while others can't and U.S. administration waivers on oil export that allowed India to buy oil from Iran for the first time in years, as well as demanding tolls for vessels to transit through the Hormuz.
Those benefits, however, are outweighed by the damage that the war has caused Iran's economy, Zimmt said.
Write to Dov Lieber at dov.lieber@wsj.com
(END) Dow Jones Newswires
April 06, 2026 05:30 ET (09:30 GMT)
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