The US naval blockade of Iran has severed the Islamic Republic’s main economic corridor, leaving Tehran facing an impending oil storage crisis and its population struggling with soaring food prices and soaring unemployment.
But unless the United States is prepared to continue its naval blockade for many more months, it will be difficult to completely dismantle Iran’s economy, which has spent years adapting to American pressure and crippling sanctions.
And as much as Iran is suffering, Iranian leaders are likely aware that the pressure is on Trump as well, as the US president faces a growing backlash at home over the war and with critical midterm elections looming. The Iranian government may have calculated that President Trump would be the first to blink.
Just three months ago, Iran’s government was on the brink of collapse after its people took to the streets across the country to protest the country’s poor management of the economy. That same government was given a lifeline when the United States and Israel launched their attacks, and now uses the war as an excuse to justify the dire economic situation of the country of 92 million people.
“Iran has already faced the biggest pressure campaign of President Trump’s first term, forcing him to cut oil production in half,” Esfandyar Batmanghelij, CEO of the think tank Bors & Bazaar, told CNN.
“If the blockade lasts for months, it will undoubtedly affect Iran’s economic prospects, but the Iranian expectation is that the United States itself will not be able to withstand the pressure for that long.”
What began more than 10 days ago as a blockade of Iranian ports has expanded globally, with all ships connected to Iran facing intense surveillance by the U.S. Navy throughout their voyages.
One of the main outcomes of the blockade will be that Iran will be unable to export key products. If the country is unable to transfer the millions of barrels of oil it produces each day, it could be forced to cut production. Exports of crude oil and petroleum products are Iran’s main source of foreign exchange.
Batmanghelidzi said Iran could probably maintain its current oil production for another two to three months before storage issues become a “serious consideration.”
Shipping analysis firm Kupler also said Iran still has plenty of oil storage space left on land, noting that the country has about 30 million barrels to spare, meaning it is still weeks away from reaching that limit.
Storage capacity could be further increased if other ways to remove stored oil could be found.
One option Iran is considering is using retired crude oil tankers. Tankertrackers.com, a maritime information company that tracks oil shipments, said the 30-year-old large carrier called NASHA was observed sailing toward an oil storage terminal on Kharg Island, presumably to unload oil and serve as a floating storage facility.
Until a ceasefire was declared on April 7, the United States and Israel attacked Iran almost daily, killing senior government officials and targeting core infrastructure such as steel mills, petrochemical facilities and intercity highways.
For most of the war, a key US goal was to reopen the vital Strait of Hormuz. But after Iranian negotiators failed to reach a deal with their American counterparts this month, President Donald Trump changed tactics and launched what Defense Secretary Pete Hegseth called an “iron-clad” naval blockade of Iran from the Gulf of Oman to the “open ocean.”
“For the Tehran regime, the blockade is tightening by the minute. We are in control. Nothing is coming in. Nothing is coming out,” Hegseth said at a press conference on Friday.
The US move comes in response to Tehran’s decision to close the Strait of Hormuz and impose unofficial tolls on ships passing through this critical maritime chokepoint, which facilitates more than a fifth of global oil and gas exports and causes oil prices to soar.
“The strait doesn’t work when it’s under threat, and the payment for safe navigation, let’s call it what it is, protection money. Hormuz belongs to the world. It has to be given back to the world. That’s absolutely right,” Sultan Al Jaber, CEO of Abu Dhabi’s state oil giant ADNOC, said on the X show last week.
Southern Iran is the backbone of the country’s trade and economy, processing most of its oil exports through terminals. Although Iran has borders for land trade, there is nothing comparable to its southern coastline. Khalgh Island alone exports about 90% of Iran’s crude oil, but other locations dotted along the coastline give Iran the option of shipping crude across the Strait of Hormuz.
Due to the ongoing U.S. naval blockade, these southern terminals are severely restricted even across the Strait of Hormuz.
The war with Iran also threatens the world’s supplies of aluminum, plastics and rubber. The Middle East ships about 25% of polypropylene and 20% of polyethylene, two of the world’s most used plastics. It also accounts for a quarter of the world’s sulfur and 15% of its fertilizers.
Hegseth said ships arriving and departing from Iranian ports were being turned back, and as of Friday, 34 ships had been seized in the region, with two other Iran-linked vessels also seized in the Indo-Pacific. At least publicly, the United States has emphasized that it will not back down.
“Regardless of what President Trump decides, we will continue the lockdown for as long as necessary,” Hegseth said.
If Iran is forced to resort to alternative import routes, such as its land border or the Caspian Sea to the north, already high commodity prices could rise further.
State media quoted Iran’s Deputy Labor Minister Gholamhossein Mohammadi as saying that the war has already cost one million jobs in Iran and affected two million others.
Iranian Labor Ministry official Alireza Mahjoub told the Iranian Labor News Agency (ILNA) that another 130,000 workers have lost their jobs due to the factory attack.
The Iranian government insists there are no shortages of goods and that the country’s food supply chain is fully operational, with 85% of agricultural products and basic goods produced domestically, despite “pressure, sanctions and maritime restrictions.”
Residents in Tehran confirmed to CNN that the market is still stocked, even though the prices of basic goods such as chicken, rice, eggs and medicine have tripled and even quadrupled.
But while many American voters are wary of soaring gas prices, Iranians are used to such challenges.
“For the Iranian leadership, the goal during the war is not to keep the economy running normally,” Batmanghelidzi said. “The goal is just to keep the economic machine running well for as long as possible, and I think they can probably manage that.”
The country’s President Masoud Pezeshkian acknowledged that there was a fuel shortage that required “careful planning” and “the cooperation of the people”, but said what the government had achieved was “a blessing from God”.
Iran’s new supreme leader Mojtaba Khamenei, who has not been seen or heard from since taking office last month, called on his people in writing to “take care of each other so that the pressures caused by shortages, which are the natural effects of war, are alleviated on various segments of society.”
There were tentative signs of progress in negotiations this weekend, with a US envoy expected to follow Iran’s top diplomat to Pakistan, and mediators keen to restart talks. But unlike Washington, the Iranian government has more than short-term considerations in mind, having survived decades of U.S. hostility.
