DUBAI — A US campaign to throttle Iran's economy by blockading its oil exports and shutting down sanctions evasion is becoming increasingly difficult to withstand, three senior Iranian sources said.

In recent weeks, Washington has sought to ratchet up economic pressure on Tehran in an effort to extract concessions in any future negotiation — concessions that six months of conflict have so far failed to secure.

Although Iran's clerical rulers managed to bypass sanctions for decades — building an ecosystem of front companies, disguised tanker fleets and third-country intermediaries that kept oil revenue flowing even under earlier rounds of US and international sanctions — the latest US moves have left them in a far more vulnerable position, with few remaining channels to secure foreign currency or buy goods, the sources said. In particular, the effort to stop Iran from accessing international financing networks in other countries — networks it has long relied on to keep its economy functioning — poses a real and urgent threat, according to the sources.

Any sign that the economic campaign may break the months-long deadlock in the conflict will likely cheer US planners, though Iran has also warned it could respond to the pressure with military escalation, raising the stakes at a key moment. For global oil markets, the stakes are also significant: Iran was producing around three million barrels a day before the blockade began, and the loss of most of its exports has tightened a market already shaped by OPEC+ supply management and ongoing disruption around the Strait of Hormuz, through which roughly a fifth of the world's oil normally transits.

Petrol stocks low as currency collapses

The war erupted back into open fighting this week, with US attacks along Iran's Gulf coast prompting retaliatory Iranian strikes at US bases in Arab states. Neither side has yet signaled it is ready to make the concessions demanded by the other, leaving the war in a costly stalemate — though one that may be shifting.

While more energy is flowing to international markets through the Strait of Hormuz despite Iranian efforts to continue disrupting the seaway, the US blockade of Iranian oil exports has entirely cut off Tehran's main source of revenue. Oil sales have historically accounted for the bulk of the government's foreign currency earnings, making their loss especially difficult to replace.

Adding to Iran's problems, the economy was already deep in crisis before the conflict, with a cratering currency and spiraling inflation, while months of bombing have run up a massive bill to rebuild damaged industry and infrastructure. Meanwhile, the country's financial squeeze is itself biting into Tehran's efforts to get around the sanctions regime, leaving less cash to pay the high premiums required to skirt sanctions illicitly, the sources said.

The rial has fallen to record lows in recent days, and one senior source said Iran has only another two months' supply of gasoline — which must be imported despite domestic oil production because of limited refining capacity, a long-standing structural weakness that leaves the world of crude-rich Iran dependent on fuel imports when trade channels close.

Iran's rulers are keenly aware of the potential risks of an economic meltdown and the possibility of it reigniting the nationwide mass protests they put down in January by killing thousands of demonstrators. Iran has a history of unrest driven by economic grievances, from protests over fuel price hikes in 2019 to the 2022–2023 demonstrations that followed the death of Mahsa Amini in morality police custody.

"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, professor of modern history at St. Andrews University in Scotland.

The war is also entering a new phase, with each side trying to influence the other's politics. Iran hopes the threat of inflation will deter the US administration before midterm elections in November, while Washington aims to push Iranians to revolt, a senior Iranian official said.

Blockade and secondary sanctions squeezing Tehran

The latest US measures expanded secondary sanctions targeting countries doing business with Iran, in a bid to stop it clearing dollar transactions needed both for oil sales and to finance crucial imports of goods and raw materials. Such secondary sanctions — which penalize foreign banks and firms rather than Iran directly — have long been Washington's most powerful tool, because access to the dollar-based global financial system is hard for any international business to forgo. That effort is making Iran's existing sanctions evasion networks — front companies, unregistered tankers and smuggling — too expensive to use, the three senior sources said.

Iranian crude loadings have fallen this month to about 260,000 barrels a day, from about 1.7 million a year earlier, according to data from commodity analytics firm Kpler, with only a trickle still moving off terminals for distribution by truck, train or smaller boats over the Caspian Sea.

Tehran says it still has tens of millions of barrels stored in tankers outside the blockade zone that it can sell, but the new sanctions mean intermediaries are stepping back or demanding more money, one of the officials said.

Total trade has fallen between 25% and 35%, with imports hit harder than exports, President Masoud Pezeshkian has said — one of several top officials warning in recent weeks about Iran's rapidly deteriorating situation.

US pressure and Iran's own attacks have meanwhile disrupted one of the main conduits for Iranian trade: the United Arab Emirates, which said on August 19 that all commercial exchange and financial dealings with Tehran were halted until further notice. The UAE, just across the Gulf from Iran, has long served as a key entrepôt for Iranian goods and re-exports, and its withdrawal removes one of the last practical routes for Iranian commerce.

"If those channels stay closed, a supplier wants cash, a deal is routed through another country and a shipment arrives later and dearer," said an Iranian trader in Tehran who deals in imported goods.

The currency has collapsed in value from around 1 million rials to the dollar a year ago to over 2.2 million rials now.

The internal impact is severe. Official figures put 12-month average inflation at 69.9%, with food, beverage and tobacco prices rising at nearly twice that rate. Official unemployment rose to 9.1% in the spring, while the number of those in work fell by about 450,000 from a year earlier amid a wider decline in labor force participation.

Even for those still in work, the average monthly salary of around $125 comes nowhere near meeting basic household spending requirements of around $450 a month, according to official data.

"We are getting poorer every day," said Mahnaz, a 34-year-old private-sector employee in Tehran who asked that her family name not be used.

— Reuters