Iran’s Economy Faces New Strain as War and U.S. Sanctions Deepen

Iran is facing growing economic pressure as the prolonged conflict with the United States combines with an increasingly aggressive U.S. sanctions campaign. The strain is being felt through trade, oil exports, inflation, currency instability and shortages of essential goods.

Iranian President Masoud Pezeshkian has said foreign trade has fallen by about 35%, while Iranian authorities are also confronting severe price instability. Reuters reported that inflation has reached about 66%, adding to pressure on households and businesses. Oil revenues, a critical source of foreign currency for Tehran, have also been disrupted, with Iran reportedly able to sell oil during only a limited U.S.-approved period in June.

Washington has expanded its economic campaign beyond direct sanctions on Iranian entities. On August 24, the U.S. Treasury launched what it called “Operation Economic Outcast,” targeting international networks involved in Iranian oil shipments, financial channels and other activities that Washington says help Tehran generate revenue. The measures include companies and networks operating across several countries and regions.

The pressure is also affecting Iran's access to foreign currency. Earlier in August, the U.S. Treasury targeted networks that it said helped Iran move hundreds of millions of dollars through clandestine financial channels.

The economic consequences extend beyond government finances. Fuel shortages and disruptions to supply routes have contributed to long queues at petrol stations, while the weak currency and high inflation are making everyday goods increasingly expensive.

Despite the mounting pressure, Tehran continues to rely on alternative trade and financial networks to keep its economy functioning. China remains an important buyer of Iranian oil, making enforcement of secondary sanctions a major challenge for Washington.

The economic outlook therefore remains highly uncertain. If restrictions on oil exports, shipping and international financial access continue, Iran could face deeper shortages, weaker trade and further pressure on living standards. At the same time, Tehran's ability to maintain alternative trading channels means sanctions alone may not quickly resolve the wider conflict.