Three high-level Iranian sources said the US campaign to strangle the Iranian economy by restricting oil exports and stopping sanctions evasion is becoming more severe for Tehran.
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In recent weeks, Washington has sought to escalate economic pressure on Tehran, in an attempt to extract concessions in any future negotiations after the six-month-long conflict failed to achieve this.
The sources said that although Iran’s clerical rulers have been successful in circumventing sanctions for decades, the latest US measures have put them in a much more precarious position, with few channels left to secure foreign currency or purchase goods.
The sources added that efforts to deny Iran access to international financing networks in other countries have become a real and urgent threat, after Tehran has long relied on them to keep the economy running.
Despite the success of Iran's clerical rulers in circumventing sanctions for decades, the latest US measures have placed them in a far more precarious position, leaving them with few remaining channels to secure foreign currency or purchase goods.
Any indication that the economic campaign might succeed in breaking the months-long stalemate in the conflict would be welcome news for policymakers in Washington. However, Iran has warned that it could respond to the pressure with further military escalation, raising the stakes at a highly sensitive juncture.
Gasoline stocks decline as currency collapses
The war erupted again in the form of open fighting this week, as US attacks along Iran’s Gulf coast prompted Tehran to carry out retaliatory strikes targeting US bases in Arab countries.
Neither side has yet shown a willingness to make the concessions demanded by the other, keeping the conflict in a costly stalemate, although there are signs that this situation may change.
While larger quantities of energy are flowing into global markets through the Strait of Hormuz despite Iran’s continued attempts to disrupt navigation there, the US embargo on Iranian oil exports has cut off Tehran’s main source of revenue.
Adding to Iran's problems, the economy was already in a deep crisis before the conflict, with a collapsing currency and soaring inflation. The months-long bombing campaign added further burdens, resulting in a massive bill for rebuilding damaged industry and infrastructure.
Meanwhile, the sources said that the financial pressures themselves are affecting Tehran’s efforts to circumvent the sanctions regime, leaving it with less cash to pay the high premiums required for illicit sanctions evasion operations.
Financial pressures themselves affect Tehran's efforts to circumvent the sanctions regime, leaving it with less cash to pay the high premiums required for illicit sanctions evasion operations.
The Iranian rial has fallen to unprecedented lows in recent days. An Iranian source said the country has only enough gasoline reserves for two more months, which must be imported despite domestic oil production due to limited refining capacity.
Iran’s rulers are fully aware of the risks of an economic collapse and the potential for renewed widespread protests like those that swept the country in January, which were suppressed by authorities killing thousands of demonstrators.
Ali Ansari, a professor of modern history at the University of St Andrews in Scotland, said: “Iran is under very severe economic pressure. It is losing control of the Strait. The real question is whether it will choose to negotiate, and I think it will find itself forced to do so.”
The war is entering a new phase, as each side tries to influence the internal politics of the other.
A senior Iranian official said that Iran hopes the threat of inflation will deter the US administration before the midterm elections in November, while Washington aims to push Iranians toward revolution.
The blockade and secondary sanctions are tightening the noose around Tehran.
The United States has recently expanded secondary sanctions on countries that do business with Iran, in an attempt to deny it the use of the dollar to settle oil sales transactions and finance its vital imports of goods and raw materials.
The three senior sources said these efforts are making Iran’s existing sanctions evasion networks, such as front companies, unregistered oil tankers and smuggling, too expensive to use.
Kpler data showed that Iranian crude oil shipments fell this month to around 260,000 barrels per day, compared to about 1.7 million barrels per day a year ago. Only limited quantities are now leaving Iranian ports, transported by trucks, trains, or small boats across the Caspian Sea.
Kpler data showed that Iranian crude oil shipments fell this month to around 260,000 barrels per day, compared with around 1.7 million barrels per day a year ago.
One source said 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 would push middlemen to back out or demand larger sums.
Iranian President Masoud Pezeshkian says total trade volume has fallen by between 25 and 35 percent, with imports suffering more than exports. Pezeshkian is one of several senior officials who have warned in recent weeks about Iran's rapidly deteriorating situation.
Meanwhile, US pressure and Iranian attacks themselves are disrupting one of the main channels of Iranian trade after the UAE announced on August 19 the suspension of all trade and financial transactions with Tehran until further notice.
An Iranian trader in Tehran who works in the trade of imported goods said: “If these channels remain closed, the supplier will demand payment in cash, which necessitates the transaction passing through another country, and thus the shipment arrives late and at a higher price.”
The value of the riyal has fallen from about one million riyals to the dollar a year ago to more than 2.2 million riyals currently.
The economic crisis is having a severe impact on living conditions. Official data indicates that average inflation over the past twelve months reached 69.9 percent, with food, beverage, and tobacco prices rising at nearly double that rate.Even for those who are still working, the average monthly salary of about $125 is by no means sufficient to cover the basic household expenses estimated at about $450 per month, according to official data.
“We are getting poorer day by day,” said Mahnaz, a 34-year-old private sector employee who asked that her last name not be used.
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