Iran’s Economy Groans Under the Weight of War and U.S. Sanctions

Al-Taj News – Six months into the war with the United States and Israel, the economic cost of the confrontation has become clearer in Iran, with an official acknowledgment that foreign trade has declined by about one-third and inflation has risen to severe levels, while the administration of U.S. President Donald Trump intensifies its financial campaign against Tehran in an attempt to narrow its sources of funding.

As an indication of the scale of the pressure, Iranian President Masoud Pezeshkian said that exports and imports had declined by about 35 percent as a result of U.S. sanctions and the naval blockade imposed on Iranian ports, while the annual inflation rate reached 66 percent last month.

Economic Priority

The Iranian government said Saturday that addressing the economic repercussions of sanctions and the war has become a major priority, placing at the top of its tasks curbing inflation, regulating markets, creating jobs, directing investments toward domestic production, and gradually reducing reliance on the dollar.

Pezeshkian announced that his country would begin imposing restrictions on the government and official departments before placing additional burdens of the crisis on citizens.

As a further indication of concern within the Iranian leadership, Supreme Leader Mojtaba Khamenei called on the government to deal “seriously” with a series of economic and livelihood challenges, foremost among them inflation, unemployment, prices, and goods and services markets.

Khamenei has not appeared publicly since he was injured in the first attack that took place on February 28, which killed his father, former Supreme Leader Ali Khamenei.

Washington Tightens the Noose

The Iranian moves come as the Trump administration escalates its financial war on Tehran after negotiations reached a dead end.

Washington has demanded that countries sever their trade relations with Iran or face secondary sanctions, as part of a broad pressure campaign. However, it has so far avoided imposing direct sanctions on two of Tehran’s major trading partners, China and India, given the potential repercussions for the U.S. and global economies.

Oil: A Temporary Breathing Space

Despite the tightening squeeze on Iranian trade, oil provided Tehran with some breathing space during the brief period of de-escalation.

Pezeshkian said Iran managed to sell about 90 million barrels of oil during the period in which the short-lived memorandum of understanding reached between Tehran and Washington was in effect in June, when the United States allowed Iranian oil sales.

But the end of those arrangements returned the Iranian economy to facing the pressures of war and sanctions, as the government seeks to contain their impact on markets and living standards.