US-Iran war enters 6th month: Trade falls 35%, oil exports hit as sanctions reshape Tehran’s economy

Iranian President Masoud Pezeshkian said on Saturday that foreign trade had shrunk by nearly 35% because of US sanctions and the blockade of Iranian ports, reported Reuters citing Iranian media.

The economic pressure comes as Iran faces 66% inflation, weaker access to foreign markets and disruption around the Strait of Hormuz, a critical route for global energy shipments.

Tehran’s response has been to combine diplomacy with defence while focusing on inflation, jobs, domestic production and reducing dependence on the US dollar.

The challenge for Iran is whether those measures can offset the loss of foreign trade and oil revenue if the conflict continues.

Impact on Iran’s trade

The 35% fall in foreign trade is one of the clearest indicators of the conflict’s economic cost. Pezeshkian gave the figure as the war reached its six-month mark, attributing the decline to US sanctions and the naval blockade. The contraction affects businesses that depend on imports, exports and access to overseas markets.

The Strait of Hormuz has added another layer of pressure. Only seven vessels crossed the waterway, compared with a usual daily average of about 15, according to Reuters report.

For Iran, the disruption is particularly significant because the country needs functioning shipping routes to maintain trade and oil exports.

The government said on Saturday that it would continue using diplomacy and defence together while working to contain inflation, create jobs and strengthen domestic production. It also said Iran would gradually reduce its dependence on the dollar.

But increasing domestic production cannot quickly replace access to international markets. Businesses still need foreign inputs, buyers and financial channels to maintain international trade.

What is happening to Iran’s oil exports?

Oil remains critical to Iran because crude exports provide an important source of foreign currency. Tehran briefly gained an opportunity to increase oil sales in June. Pezeshkian said Iran sold about 90 million barrels of oil during a short-lived memorandum of understanding between Tehran and Washington, reported Reuters citing Iranian media.

That arrangement did not last. The ceasefire broke down after further exchanges of strikes, followed by a renewed US sanctions campaign.

Washington has described its latest sanctions push as an “economic D-Day”. The campaign has included secondary sanctions targeting companies, financial institutions and individuals linked to Iran.

Egypt’s Banque Misr was among the institutions facing US action, according to Reuters report. The sanctions are designed to make it harder for Iran to access international financial channels and continue selling its oil.

The disruption around Hormuz affects Iran’s economy beyond its oil industry. The waterway is a major route for energy shipments, and restrictions on shipping have affected the movement of crude and petroleum products across the region.

The US Energy Information Administration said in an August 11 report that disruptions to crude oil and petroleum-product flows through the Strait had contributed to higher and more volatile oil prices during the second quarter of 2026.

EIA said the disruption forced international buyers to seek alternative sources of petroleum products. Brent crude reached as high as $118 a barrel on April 29 before falling to $72 a barrel on June 26.

For Iran, however, higher global oil prices do not necessarily solve the problem.

Tehran needs to be able to export its crude and capture the revenue. If sanctions and shipping restrictions prevent that, a higher international oil price offers only limited relief.

Can Iran rely on domestic production?

Iran’s government is increasingly emphasising economic self-reliance as access to foreign markets becomes more difficult. In its statement on Saturday, the government said it would focus on reducing inflation, creating jobs, supporting domestic production and gradually reducing dependence on the dollar.

The strategy reflects the pressure created by sanctions. With fewer opportunities to trade internationally, Tehran wants domestic businesses and production to play a larger role in meeting economic needs.

Reuters reported that inflation had surged to 66%, putting further pressure on household purchasing power.

Higher prices can also increase political pressure on the government, particularly if shortages or restrictions on imported goods become more widespread.

The economic challenge therefore goes beyond oil. Iran must maintain employment and domestic production while its access to international markets and financial systems is restricted.

Are Iran’s leaders preparing for a longer confrontation?

Iran’s economic response is also taking place alongside changes in its political and security leadership. On August 11 and 12, Iran’s Supreme Leader Ayatollah Mojtaba Khamenei announced a series of senior leadership appointments, reported AP.

Mohsen Rezaei became secretary of Iran’s Supreme National Security Council, while Brig. Gen. Ahmad Vahidi was confirmed as head of the Islamic Revolutionary Guard Corps. Other senior military commanders also retained or received key positions.

Analysts cited by AP said the appointments indicated greater emphasis on internal unity and a tougher approach towards the conflict with the United States.

Sascha Bruchmann of the International Institute for Strategic Studies told AP that the leadership appeared to be bringing “hard core people” into its inner circle.

Rezaei has also threatened a stronger response if Trump takes further action. He said Iran would retaliate in a “seismic manner” and warned that if the economic war continued, “not a single drop of oil will be exported” from the Persian Gulf, according to AP report.

Such escalation could give Iran leverage over global energy supplies, but it could also deepen the economic damage to Tehran itself.

Kpler oil analyst Homayoun Falakshahi told AP that the appointments of Rezaei and Vahidi pointed to greater influence for officials associated with a tougher position. He also said escalation was not inevitable because Iran could struggle to increase pressure without triggering a response that leaves the country weaker.

Iran’s leadership also faces differences over how to respond to the conflict. Pezeshkian said last week that ending the war would be preferable because Iran had already gained “power and dignity” and the United States had become widely disliked, according to AP. That position puts him at odds with some hard-liners who oppose normalisation with Washington.

Tehran-based political analyst Ahmad Zeidabadi told AP that “serious differences” existed over Iran’s future direction. He argued that some hard-liners oppose normalisation with the US because their political survival depends on continued conflict and hostility.

The disagreement adds another challenge for Tehran as the economic cost of the war increases.

Can Iran sustain the economic pressure?

Iran has several tools available, including domestic production, diplomacy, oil sales and its strategic position around the Strait of Hormuz. But each comes with limitations.

The June memorandum temporarily allowed Iran to sell about 90 million barrels of oil, showing that access to buyers can provide significant relief. The collapse of that arrangement and renewed sanctions have again restricted Tehran’s options.

At the same time, restricting shipping through Hormuz could hurt Iran’s own trade and oil exports even as it puts pressure on the US and other countries.

The longer the conflict continues, the harder it could become for Tehran to balance those competing objectives.

Iran’s government has signalled that it is preparing for a prolonged confrontation while trying to contain inflation, protect jobs and strengthen domestic production.

But a 35% decline in foreign trade, 66% inflation and continued restrictions on oil exports show the scale of the economic challenge.