Iran's primary economic routes are being blocked by a US naval blockade, which is causing Tehran to face an impending oil storage crisis and its populace to struggle with soaring food costs and skyrocketing unemployment.
However, it will be challenging to fully destroy an Iranian economy that has spent years adjusting to US pressure and crushing sanctions unless Washington is willing to extend its naval blockade for several more months.
Iran's leaders will also be aware that Trump is under pressure due to the impending key midterm elections and the growing domestic backlash against the war. It's possible that Tehran has calculated that Trump will blink first.Three months ago, the Iranian government was in danger of collapsing due to widespread protests against the country's dismal economic management. When the US and Israel began their strikes, that same government was granted a lifeline. Now, it is using the justification of war to explain the dire economic situation to a 92 million-person country.
Esfandyar Batmanghelidj, CEO of the think tank the Bourse & Bazaar Foundation, told CNN that Iran had already been subjected to the most intense pressure campaign during Trump's first term, forcing it to reduce its oil production by half."The economic outlook for Iran will undoubtedly be impacted if the blockade is in place for months, but the Iranian expectation is that the US itself cannot tolerate that pressure for that long."
The embargo of Iranian ports, which started almost ten days ago, has spread throughout the world, with US naval personnel closely monitoring every ship connected to Iran while it is at sea.
Iran's inability to export its primary commodity would be one of the blockade's principal effects. The nation may have to reduce output if it is unable to transport the millions of barrels of oil it produces every day. Iran's main source of foreign exchange is the export of petroleum products and crude oil.Before storage problems become "a significant consideration," Iran may likely continue producing oil for another two to three months, according to Batmanghelidj.
According to maritime analytics firm Kpler, Iran still has a lot of onshore oil storage capacity. It has about 30 million barrels of headroom, therefore it is still weeks away from reaching its maximum.
If it discovers alternative ways to release the stored oil, it might potentially extend storage capacity.Iran is considering the use of its defunct crude ships. According to Tankertrackers.com, a marine intelligence firm that monitors crude oil exports, a 30-year-old big carrier named NASHA was seen cruising near oil storage terminals on Kharg island in order to potentially dump oil and function as floating storage.
"There is nothing in." Nothing is left out.
Prior to the declaration of a truce on April 7, the United States and Israel had been attacking Iran almost every day, murdering high-ranking officials and destroying vital infrastructure such as steel mills, petrochemical plants, and city-to-city roadways.Reopening the vital Strait of Hormuz was a major US objective for the majority of the conflict. However, President Donald Trump changed course this month after Iranian negotiators were unable to come to a deal with their American colleagues, initiating what Defence Secretary Pete Hegseth described as a "iron-clad" naval blockade on Iran from the Gulf of Oman to the "open oceans."
The blockade is getting tighter by the hour, according to the Tehrani dictatorship. We're in charge. Nothing is in. At a press conference on Friday, Hegseth stated, "Nothing out."
Tehran's decision to close the Strait of Hormuz and levy an unofficial toll on ships travelling through this crucial maritime chokepoint prompted the US to take action.It enables the export of more than 25% of the world's petrol and oil, leading to a dramatic increase in oil prices."The Strait cannot function in a dangerous situation. Let's refer to the payment for safe passage as a protection racket. Hormuz is a part of the planet. It needs to be put back into the world. The CEO of Abu Dhabi's state oil corporation ADNOC, Sultan Al Jaber, stated on X last week that everything was exactly as it was.
With terminals managing the great majority of its oil exports, southern Iran serves as the backbone of the nation's economy and trade. Although Iran has land borders for some overland trade, the southern coastline is unmatched.Even beyond the Strait of Hormuz, these southern ports are severely restricted by the continuous US naval blockade.
The global supply of rubber, plastics, and aluminium has also been challenged by the war with Iran. Approximately 25% of the world's polypropylene and 20% of its polyethylene, two of the most widely used plastics, are shipped from the Middle East. Additionally, it provides 15% of the world's fertiliser and 25% of its sulphur.
According to Hegseth, ships travelling to or from Iranian ports have been turned around. As of Friday, 34 vessels had been intercepted in the area, and two more ships with ties to Iran had been apprehended in the Indo-Pacific. At least in public, the US emphasises that it will not back down.
"A blockade for as long as President Trump chooses," Hegseth remarked.The Supreme Leader warns that if Iran is forced to use other import channels, including its land borders or the Caspian Sea to the north, the already rising cost of products could rise even further.
Iran's deputy labour minister, Gholamhossein Mohammadi, was quoted by state-affiliated media as saying that two million people's jobs had been impacted by the conflict and that one million jobs have already been lost.
Iran's Labour Ministry spokesman Alireza Mahjoub informed the Iranian Labour News Agency (ILNA) that an additional 130,000 workers lost their employment as a result of the strikes in their workplaces.Despite "pressures, sanctions, and maritime restrictions," the Iranian government has insisted that there are no shortages of foodstuffs and that the nation's food supply chain is fully operational, with 85% of agricultural items and basic necessities produced domestically.
Although the cost of necessities like chicken, rice, eggs, and medication has tripled or even quadrupled, a Tehran resident told CNN that markets are still stocked.
However, rising petrol prices have scared many US voters, while Iranians are more used to such problems.According to Batmanghelidj, "running a normal economy is not the goal for Iran's leadership during the war." "I think they can probably manage that, and the goal is just to keep the economic machine running as well as possible for as long as possible."
Masoud Pezeshkian, the president of the nation, recognised that there are fuel shortages that call for "careful planning" and "public cooperation," but he referred to what the administration has accomplished as "divine grace."
In a written statement, Iran's new Supreme Leader Mojtaba Khamenei, who hasn't been seen or heard from since taking office last month, urged citizens "to be considerate of one another so that pressures caused by shortages – which are a natural effect of any war – are reduced on different segments of society."There have been faint indications of progress on discussions this weekend; US envoys are anticipated to accompany Iran's senior ambassador to Pakistan, where mediators are eager to resume talks. However, unlike Washington, Tehran has survived decades of US enmity and is motivated by factors other than immediate gain.