Iran’s Economy Begins to Feel the Impact of US Sanctions and Blockade

Iran’s economy is beginning to feel the full force of the US sanctions and blockade, with access to foreign currency and imported goods becoming increasingly difficult, according to three senior Iranian sources cited by Reuters.

The pressure has intensified as fighting between the United States and Iran resumed this week. US attacks along Iran’s Gulf coast prompted Tehran to retaliate against US bases in several Arab countries. Neither side has signaled readiness to make the concessions demanded by the other, but the prolonged standoff may be shifting as economic pressure on Iran grows.

Washington’s blockade of Iranian oil exports has struck at Tehran’s main source of revenue. Kpler, a commodities analytics company, estimated that Iranian crude loadings had dropped to around 260,000 barrels per day this month, sharply below the 1.7 million barrels per day recorded a year earlier. Only small volumes are still leaving ports by truck, rail or small vessels across the Caspian Sea.

Tehran says tens of millions of barrels remain stored on tankers outside the blockade area and could still be sold. But the new sanctions have made intermediaries more reluctant to participate or pushed them to demand higher fees. The United States has also expanded secondary sanctions against countries doing business with Iran, seeking to block dollar transactions used for oil sales and imports of essential goods and raw materials.

Three Iranian sources said long-standing methods for evading sanctions, including shell companies, unregistered tankers and smuggling, were becoming too expensive. Trade with the United Arab Emirates, another important route, was disrupted after Abu Dhabi announced on Aug. 19 that it was suspending all trade and financial transactions with Tehran until further notice. An Iranian merchant in Tehran said continued closures would mean cash payments, indirect transactions through other countries and slower, more expensive deliveries. President Masoud Pezeshkian said Iran’s total trade had fallen by 25% to 35%, with imports hit harder than exports. The rial has also repeatedly fallen to record lows.

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If these channels remain closed, suppliers will demand cash, transactions will have to go through another country, and goods will arrive more slowly and at higher prices.