5 minWorld
Iran’s president admits economy is in crisis as U.S. blockade tightens around Hormuz
Iranian President Masoud Pezeshkian acknowledged severe economic problems, including inflation above 80% and a projected 6.1% GDP contraction, as a U.S. naval blockade chokes oil exports and fuel imports while Washington works to reopen the Strait of Hormuz.
Iranian President Masoud Pezeshkian has publicly acknowledged the depth of his country’s economic crisis, admitting in a state media interview that inflation, unemployment, and shortages have become overwhelming even as the U.S. military tightens a naval blockade and works to break Tehran’s hold on the Strait of Hormuz.
“We have many problems,” Pezeshkian said, according to a translation of the Friday interview. “There’s inflation, economic issues, employment and many other problems, but the people are with us.” He added, in an apparent rebuke to hardliners who reject negotiations with Washington, that “we may have many things; we may even have missiles and bombs, but they are of no use.”
The remarks come as Iran’s economy shows signs of severe strain. Inflation has soared above 80%, with prices for some food staples up 100%. The International Monetary Fund projected in April that Iran’s economy would contract by 6.1% this year, the worst decline in decades. A labor ministry official estimated that more than 1 million jobs had been lost by late May.
Pezeshkian also acknowledged that imports, including gasoline, are not entering the country. The naval blockade has prevented Iran from exporting oil through its ports while also cutting off refined fuels that Tehran needs despite being a major crude producer. The result has been shortages and long lines at gas stations, made worse by deep subsidies that encourage excess consumption.
“We shouldn’t make someone whose life revolves around gasoline suffer,” Pezeshkian said. “We shouldn’t put more pressure on those who are already under pressure. People are on the edge now; if I put more pressure on them, they might fall off the edge. We have to be careful that no one falls off.”
The president estimated that Iranian trade has plunged 25% to 35%, with imports down significantly more than exports. Trade intelligence firm Kpler reported that Iran’s August crude export loadings collapsed more than 80% compared with a year earlier. “Some people say that sanctions have no effect at all,” Pezeshkian said. “I really don’t know what to tell these people. I just want to say this, saying that sanctions have no effect is not consistent with these facts.”
While the U.S. military tightens its economic chokehold, it is simultaneously loosening Iran’s grip on the Strait of Hormuz. Last week, U.S. Central Command said forces had completed clearing sea mines from the strait’s international shipping routes. Estimates vary on how much oil is moving through, but volumes are substantial, though still well short of normal.
According to Goldman Sachs, total exports of crude and oil products from the region have risen to 15 million to 16 million barrels a day. Kpler said oil flows from the Persian Gulf have recovered to around 70% of pre-war levels. U.S. officials told Axios that about 10 million barrels a day are being transported through the Omani corridor that the U.S. military is defending.
A two-week stretch of U.S. bombing last month degraded Iran’s radar and maritime surveillance systems, making it easier for tankers to sail through undetected at night with transponders turned off. This has allowed vessels to make shuttle runs and unload oil to other tankers for delivery to customers. Iran is still attacking ships, but that has not been enough to stop traffic.
On Sunday, U.S. forces struck Iranian rocket launchers that were preparing to deploy sea mines in the strait. Gregory Brew, an expert on Iran and oil at the Eurasia Group, said on X that Iran overplayed its hand in July when it resumed attacks on shipping in the strait’s southern route. “The result: the MOU is dead, the blockade is back in place, and the US is succeeding at reopening the strait without another deal,” he wrote. “Perhaps the status quo swings back in Iran’s favor, but right now this looks like a miscalculation to me.”
