Tehran, Iran – After months of oscillating between new bouts of fighting and negotiations, the administration of United States President Donald Trump has reportedly opted for a third option – gradual economic pressure on Tehran. US Secretary of State Marco Rubio told his Group of Seven (G7) counterparts in Paris on Tuesday that a naval blockade, stringent sanctions and overland border disruptions could continue without a clear endpoint in sight, according to US media. He later said that Iran’s economy “continues to collapse” and predicted worsening conditions over the next one to three months.
Tehran-based economist and market analyst Isaac Saidian said that if the persistent economic siege on Iran brings the country’s oil incomes down to near-zero levels, Tehran will be faced with one of the most difficult challenges in its recent history. Iran’s President Masoud Pezeshkian has indicated that the cash-strapped civilian government is preparing to deal with a prolonged economic crisis caused by siege and sanctions, but has admitted that the lingering “no war, no peace” conditions will be harmful. But the authorities have stressed that there are no prospects of economic collapse.
They have also raised the prospect of “breaking the blockade” if necessary, although it remains unclear by what means. In a budget directive on November 3, Pezeshkian’s administration set out two scenarios. One was the continuation of sanctions, the maritime blockade and present regional conditions.
The other prediction was an improvement of the situation involving fewer financial and commercial restrictions, including a substantial or complete removal of the blockade. The US military first imposed a naval blockade of Iran’s southern ports, through which most of the country’s trade passed, on April 13. A memorandum of understanding in June lifted the blockade and allowed some oil and trade to pass through the Strait of Hormuz, but the deal fell apart within weeks.
The second blockade has been in place since July 14, as Iran and the US fight for control of the Strait of Hormuz. The US military says it has redirected 147 ships and disabled five while enforcing the blockade. It also claimed to have destroyed 10 Iranian oil tankers linked to the shadow fleet of Iran’s Islamic Revolutionary Guard Corps (IRGC).
According to the US Treasury, the blockade has led to Iran loading no oil onto vessels since August 25. A late October assessment by Kpler said Iran’s oil production had fallen below 2 million barrels a day in the preceding months. Iran produced 3.45 million barrels of crude per day in January and 3.59 million in the following month, but Israel and the US’s war on Iran began on February 28.
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