Iran’s economy in crisis as US launches new sanctions campaign

Operation Economic Outcast, the United States’ latest sanctions campaign announced by former President Donald Trump, is deepening Iran’s economic collapse, pushing an ever‑larger share of the population into poverty. In August, the official exchange rate hit a record 2 million rials per dollar, while year‑on‑year inflation surged to 84.4 percent, according to Iran’s statistical centre. Prices for staple foods have exploded: vegetable oil is 383 percent higher than a year ago, eggs 294 percent, chicken 177 percent and red meat 148 percent. The soaring cost of basic goods has forced households to cut back dramatically, with demand for red meat halving since April 2026 and a rush to potatoes creating shortages. Citizens such as feminist Golshan Fathi and biomedical engineer Mohsen Zavaar describe a reality where even middle‑class families cannot afford a “normal life,” citing reduced diets, patched clothing, delayed medical treatment and reliance on hidden markets for medicine.

The sanctions exacerbate pre‑existing structural problems, notably Iran’s inability to export oil because of the U.S. blockade, which eliminates a crucial source of foreign exchange. Energy expert Amirhossein Hashemi‑Javid warns that barrels sit idle, accruing production, storage and risk costs without generating revenue. Domestically, fuel scarcity has triggered long queues in Tehran and Mashhad, while many petrol stations remain closed. Government officials have debated raising oil prices to curb costly subsidies, but memories of the 2019 50 percent hike that sparked violent protests make them wary. Deputy President Saqab Esfahani bluntly admitted that political factions profit from fuel smuggling, warning that any crackdown would provoke personal retaliation, a claim that has drawn calls for investigation from President Masoud Pezeshkian.

In response, Iran’s leadership is framing the economic hardship as part of a broader “war against America.” Basij head Hojatoleslam Taeb urged citizens to cut petrol use by 10 percent, presenting reduced travel as patriotic. Hard‑line security council secretary Mohsen Rezaei encouraged home‑based production of essential goods, a suggestion likened by economist Mohammad Taheri to Mao’s disastrous “backyard steel furnaces.” Meanwhile, spokesperson Fatemeh Mohajerani announced that future poverty statistics will be released only with approval from the supreme national security council, effectively treating the decline in living standards as a state secret. As the crisis deepens, analysts suggest that Iran may eventually have to weigh diplomatic engagement against continued confrontation to restore oil revenues and stabilize the economy.

⚡ Effects Interpreter