Iran's rial sank to a new record low on Tuesday, the latest sign that the country's economy is in free fall and that the government is drifting toward a severe cash shortage.

The U.S. naval blockade has driven Iran's oil exports down to virtually zero, while its Persian Gulf neighbors have raised their own shipments under the protection of the U.S. military — a shift that is eroding's control over the Strait of Hormuz. The strait, the narrow passage linking the Persian Gulf to the open ocean past Iran's coast, carries roughly a fifth of the world's oil, so any erosion of Tehran's influence there has implications for global energy flows far beyond the country's borders.

Last month, Iran loaded no oil at all at its export terminals, the first time that has happened since the 1979 Islamic revolution, according to Homayoun Falakshahi, head of crude oil analysis at Kpler.

Iran also cannot import goods by sea, including fuel, while overland routes are congested. The collapsing currency compounds that squeeze, since every slide in the rial raises the local-currency cost of whatever goods the country can still bring in. Inflation is running near 90%, GDP is projected to contract 5.4% this year, unemployment has climbed, and energy supplies are being rationed. Even Supreme Leader Ayatollah Mojtaba Khamenei has voiced concern about "social cohesion" as the economic hardship deepens.

A previous currency collapse late last year set off widespread protests, which the government suppressed in a brutal crackdown early this year. The rial has fallen further since the United States and Israel launched the war on Iran in February, stirring worries that unrest could return.

On Tuesday, the currency dropped to more than 2.5 million rials per U.S. dollar among traders in Tehran, a fresh record. That came less than a month after the rial hit its previous record low of 2.2 million to the dollar on Sept. 2.

The decline has been steep and swift. The rial traded near 1.5 million to the dollar at the start of this year and stood at around 920,000 in August 2025 — meaning the currency has plunged roughly 170% since then. Going back further, the rial began 2018 at 35,000 to the dollar, before the U.S. withdrawal from the 2015 nuclear accord and the reimposition of sanctions that year set off years of currency erosion.

For now, Tehran is still collecting a trickle of revenue from oil that was already aboard tankers at sea before the U.S. reimposed its blockade in mid-July. Kpler has estimated those supplies totaled 90 million barrels at the time and expects them to run out by the middle of this month. Payments for those final oil deliveries, which primarily end up in China, could stretch out to December. The rial's fate is tied directly to that revenue: crude sales are Iran's main way of earning the dollars that give its currency value, which is why the exchange rate has slid as the last shipments wind down.

Once that spigot runs dry, the Iranian government will be deprived of what was once its top source of hard currency. Oil sales typically account for about a third of Iran's state budget and are also a key funding source for the Islamic Revolutionary Guard Corps, the paramilitary force whose business network reaches across much of the Iranian economy.

Meanwhile, the U.S. tightened its sanctions on Iran last month, making it harder for Tehran to move money through front companies and other shadowy intermediaries.

In an interview with Fox News last week, Iranian President Masoud Pezeshkian complained that the regime's money in China is blocked. "We can't even get our own money out of a country to which we've supplied goods, let alone using those funds to pay someone else in another corner of the world," he said.

President Donald Trump has signaled that he will let his economic warfare against Iran play out and has rejected Tehran's attempts to restart negotiations. That stance was echoed by Secretary of State Marco Rubio, who told Fox News on Monday that Iran was heading toward an economic "cataclysm."

"And so when you're denying them money through oil sales and sanctions, you're not just punishing them," Rubio said. "You are preventing them from getting access to money that they will use to try and kill Americans and others around the world and their own people and build weapons and threaten the world and ultimately break out to a nuclear weapon program."

This story was originally featured on Fortune.com.