US pressure on Iran starts to bite as sanctions and oil blockade tighten

Iran’s economic crisis is worsening as US efforts to blockade its oil exports and close sanctions-evasion channels leave Tehran with fewer ways to obtain foreign currency and essential goods, according to three senior Iranian sources.

Washington has intensified the pressure in recent weeks, seeking concessions in any future negotiations after six months of conflict failed to break the deadlock. Iran’s clerical rulers have bypassed sanctions for decades, but the latest campaign is targeting international financing networks in countries that Tehran has long used to keep its economy functioning.

The pressure comes as the war has returned to open fighting. US attacks along Iran’s Gulf coast have prompted Iranian strikes on US bases in Arab states. Neither side has indicated it is ready to accept the other’s demands, leaving the conflict in a costly stalemate, although the economic squeeze may be beginning to shift the balance.

“

They are under very, very severe economic pressure. They're losing control of the Straits. It's really a question of if they choose to negotiate and I think they'll have to.

Iran’s main source of revenue has been cut off by the US blockade of its oil exports. The country was already facing a collapsing currency and spiralling inflation, while months of bombing have created a large bill for rebuilding damaged industry and infrastructure. The financial squeeze is also making it harder to pay the high premiums needed to evade sanctions illicitly.

The rial has fallen to record lows in recent days. One senior source said Iran had only about two months of gasoline supplies remaining, despite domestic oil production, because refining capacity is limited and fuel must be imported. Iranian leaders fear an economic meltdown could revive the nationwide protests suppressed in January, when thousands of demonstrators were killed. “They are under very, very severe economic pressure. They're losing control of the Straits. It's really a question of if they choose to negotiate and I think they'll have to,” said Ali Ansari, a modern history professor at the University of St Andrews. Iran has also warned that it could respond to the pressure with military escalation.

“

We are getting poorer every day.