Trump threatens to wipe out Iran as Tehran warns of ‘painful’ response

President Donald Trump threatened to destroy Iran’s economy or eliminate its leadership if Tehran doesn’t strike a deal, raising the stakes as Iranian officials head to New York for this week’s gathering of world leaders at the UN.

Trump told Fox News on Sunday that the only options on the table were “wiping Iran out,” or letting its economy “rot,” unless both sides reach a deal.

Separately, Iran’s military said that its intelligence suggested a new, large-scale strike being prepared by the U.S. and its allies, warning of “painful” retaliation across the Middle East. Regional countries backing such a strike would be treated as parties to the conflict, it said.

“If the U.S. makes any mistake against the Islamic Republic of Iran, all its positions and interests in the region will be targeted by sustained, effective and painful attacks,” the Khatam al-Anbia Central Headquarters of Iran said, according to semi-official media Tasnim.

The exchange marks the latest escalation in the seven-month war after a June memorandum collapsed, with both sides digging in before a diplomatic delegation led by Iranian President Masoud Pezeshkian is due to attend the United Nations General Assembly in New York this week.

The Iranian president will hold meetings with country leaders on the sidelines of the UN gathering, according to Tasnim.

In a phone call with a Fox News reporter, Trump said that he would be open to meeting Pezeshkian during the assembly, but also that he’s in “deciding mode” over whether to blow up the nation.

The U.S. State Department issued a security alert citing risks of unforeseen escalation in the Middle East, telling Americans to exercise more vigilance and be aware of possible flight cancellations and airspace closures.

The warnings came after Iran-backed Houthi militants claimed missile and drone attacks on Riyadh on Saturday, triggering the first air-raid alert in the Saudi capital since fighting escalated in July.

Saudi authorities said they intercepted and destroyed a ballistic missile and reported no casualties or damage. The Houthis also attempted to target civilians and infrastructure in several parts of the kingdom, Saudi-led coalition forces spokesperson Major-General Turki al-Maliki said on X on Saturday, though those attacks were thwarted by the country’s air defenses.

Oil prices have pulled back in recent days despite widening hostilities, as traders hope for a recovery in energy shipments from oil-rich Saudi Arabia. Futures for Brent crude dipped 1.7% to $102.15 a barrel and U.S. West Texas Intermediate slid 1.8% to $98.46.

Oil prices will remain high despite U.S. progress in moving oil through the Strait of Hormuz, a team of analysts at Eurasia Group said in a Saturday note. Any rebound in oil flows would not be enough to address the overall market deficit, they said, forecasting Brent prices to trade in a higher band of $90-110 per barrel through the rest of this year.

“Iran’s leadership will stick with resistance, even as they quarrel internally,” according to the consultancy firm, as Tehran seeks to use military proxies and tanker attacks to keep a chokehold on shipping flows, to pressure Washington into concessions.

Tehran has insisted that it would not reopen the Strait of Hormuz until Washington fulfills its commitment under the June memorandum, which called for lifting the naval blockade of Iranian ports, easing sanctions, unfreezing Iranian assets and ending U.S. military threats.

Iranian parliament speaker Mohammad Bagher Ghalibaf said Sunday that Iran must keep on fighting and negotiating, to push back its enemies, and only work on diplomacy when it has the upper hand on the battlefield.