Iranian President Masoud Pezeshkian acknowledged his country’s economic woes amid pressure from the U.S., which is strangling its trade while protecting other countries’ ships carrying oil through the Strait of Hormuz.
Recent weeks have seen Tehran lose leverage over the critical energy chokepoint as traffic picks up, especially via a southern route along Oman’s coast. At the same time, warnings about Iran’s economy from Pezeshkian and the regime’s other relative moderates have been mounting.
In an interview with state media on Friday, he signaled defiance in the face of all the economic pressure and credited Iran’s resilience to its unity.
“We have many problems,” Pezeshkian said, according to a Google translation. “There’s inflation, economic issues, employment and many other problems, but the people are with us.”
Indeed, inflation has soared above 80%, with prices for certain food staples up 100%. The International Monetary Fund said in April Iran’s economy will shrink 6.1% this year, the worst contraction in decades. And a labor ministry official estimated that more than 1 million jobs had been lost by late May.
In an apparent dig at Iranian hardliners who reject negotiations with the U.S. and favor continued war, Pezeshkian added that “we may have many things; we may even have missiles and bombs, but they are of no use.”
He later noted that imports are not coming into the country, including gasoline. The naval blockade has not only prevented Iran from exporting oil via its ports, it has also kept out imports of refined fuels that Iran needs despite being a major oil producer.
That has created shortages and long lines at gas stations, made worse by deep subsidies that encourage excess consumption. In the interview, Pezeshkian described efforts to curb fuel demand and hike prices, but hinted they can’t go too far.
“We shouldn’t make someone whose life revolves around gasoline suffer,” he explained. “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.”
Pezeshkian estimated that Iranian trade has plunged 25%-35%, with imports down significantly more than exports. In fact, trade intelligence firm Kpler said Iran’s August crude export loadings have collapsed more than 80% compared to a year ago.
Since the naval blockade was reimposed, U.S. force have redirected 82 commercial vessels, disabled three and boarded two to ensure compliance, Central Command said on Friday.
“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 chokehold, it is simultaneously loosening Iran’s grip on the Strait of Hormuz. Last week, Central Command said U.S. forces completed clearing sea mines from the strait’s international shipping routes.
Estimates vary on exactly how much oil is leaking through, but the upshot is the volumes are substantial albeit still well short of normal. According to Goldman Sachs, total exports of crude and oil products from the region have risen to 15 million-16 million barrels a day. And 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 of oil a day are being transported out of the strait through the Omani corridor the U.S. military is defending.
A two-week stretch of U.S. bombing last month degraded Iran’s radar and maritime surveillance systems, the report said, making it easier for tankers to sail through undetected at night with their transponders turned off. This has allowed vessels to make shuttle runs in and out, then unload oil to other tankers that deliver the cargo to customers.
To be sure, Iran is still attacking ships, but that hasn’t been enough to stop traffic. Meanwhile, the U.S. military continues to weaken Iran’s ability to close the strait. 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 on Friday that Iran overplayed its hand in July, when it resumed attack 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 (to a partial, but notable extent) at reopening the strait without another deal,” he added. “Perhaps the status quo swings back in Iran’s favor, but right now this looks like a miscalculation to me.”