With Iran’s economy in free fall, the country’s currency is getting dragged down too and continues to find new depths with the regime facing a major cash crunch soon.
The U.S. naval blockade has sent Iran’s oil exports to virtually zero, while its Persian Gulf neighbors have boosted their own shipments under the protection of the U.S. military, which is eroding Tehran’s control over the Strait of Hormuz.
In fact, Iran didn’t load any oil last month at its export terminals, marking the first time that’s happened since the 1979 Islamic revolution, according to Homayoun Falakshahi, head of crude oil analysis at Kpler.
On top of that, Iran can’t import goods by sea, including fuel, and land-based routes are clogged up. Inflation is now near 90%, GDP is expected to shrink 5.4% this year, unemployment has jumped, energy is being rationed, and even Supreme Leader Ayatollah Mojtaba Khamenei has expressed concern about “social cohesion” amid the economic hardship.
A prior currency collapse late last year trigged widespread protests that the regime put down with a brutal crackdown early this year. But since the U.S. and Israel launched the war on Iran in February, the rial has plunged further, stirring worries that unrest could return.
On Tuesday, the currency fell to a new record low among traders in Tehran, hitting more than 2.5 million rials to the U.S. dollar. It came less than a month after the rial hit its previous record low of 2.2 million to the dollar on Sept. 2.
The exchange rate has fallen a long way in a short time. It was near 1.5 million rials to the greenback at the start of this year and was trading at around 920,000 rials in August 2025—meaning the currency has plunged about 170% since then. Going back even further, the rial began 2018 at 35,000 to the dollar.
For now, Tehran is still able to generate a trickle of revenue from oil that was already in tankers at sea prior to the U.S. reimposing its blockade in mid-July. Kpler has estimated that those supplies totaled 90 millions barrels at the time and will 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. Once that spigot runs dry, however, the Iranian regime will be deprived of what was once its top source of hard currency.
Oil sales typically make up about a third of Iran’s state budget and are also key sources of funding for the Islamic Revolutionary Guard Corps.
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 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 he will let his economic warfare against Iran play out and 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,” he 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.”