For many Iranians, the new US sanctions campaign, called Operation Economic Outcast, seems unnecessary given how bad their country’s economy already is.
People in Iran are dealing with soaring food prices, closed petrol stations, and a currency that keeps losing value because the country doesn’t have enough foreign exchange reserves.
In August, vegetable oil in Iran cost 383% more than it did a year earlier. Egg prices went up by 294%, chicken by 177%, and red meat by 148%.
The collapsing economy has put the country’s political leaders on edge as they try to stop economic problems from turning into social unrest.
In reality, long before Donald Trump’s latest sanctions push, Iran’s economy had already become a separate battleground where the country’s economic officials were fighting to keep things under control.
On 23 August, the US dollar hit roughly 2 million rials on Iran’s open market, setting a new record.
Three days later, Iran’s statistical centre reported that year-on-year inflation in August reached 84.4%, with the rolling annual average rate around 65%.
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As purchasing power in Iran collapses, households are buying fewer goods. Diets are changing, clothes are being patched up instead of replaced, and medicine is in short supply, though it can still be found on the black market.
According to the Mehr news agency, demand for red meat fell by 50% in April 2026 compared to the same period last year. There has also been a big jump in potato consumption, which has led to shortages.
Basic goods like eggs are now too expensive for middle- and working-class families, Golshan Fathi, an Iranian feminist, recently said. “They don’t understand that people can no longer afford even a normal life.”
Mohsen Zavaar, a biomedical engineer, said: “For part of the population, the issue is no longer buying a house or a car; the issue is cutting out meat, reducing food quality, postponing medical treatment, and scraping by until the end of the month.”
Frustrated by officials’ inability to solve these problems, he added: “The people don’t want miracles – they want decisions.”
The crisis has spread beyond food and clothes. Long lines of cars stretched through parts of Tehran and the north-eastern Iranian city of Mashhad on Tuesday and Wednesday as motorists queued for fuel, with some lines blocking entire streets. Many petrol stations, including some of the largest, were closed.
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Drivers queue outside a petrol station in Tehran on Tuesday. Photograph: Vahid Salemi/AP
Officials blamed isolated panic buying caused by rumours of a government-planned price increase, or Israeli bombs that destroyed two of Tehran’s three main oil depots.
Inside the government, anxious discussions have been going on for weeks about raising the price of oil to cut costly subsidies, but the political class know from past experience that there could be significant pushback. A sudden overnight petrol price rise of 50% in November 2019 sparked week-long violent protests.
Public anger has been made worse by an admission that vested interests in the government made it hard to tackle fuel smuggling.
Saqab Esfahani, deputy to Iran’s president, said: “Both political factions in the country are involved in fuel smuggling, and if I were to shut down their operations, they would break my windows.”
Masoud Pezeshkian, Iran’s president, has been urged to investigate the remarks.
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Iran’s leaders have appealed to the public’s sense of patriotism as they try to weather the country’s economic downturn. Photograph: Abedin Taherkenareh/EPA
However, transparency over the economic conditions in Iran is likely to decrease.
Fatemeh Mohajerani, a spokesperson for the Iranian government, said recently that future poverty statistics would only be published with the permission of the country’s supreme national security council, making the decline in living standards akin to a classified matter.Iran’s leaders now portray the home front as part of the battle against America. Hojatoleslam Taeb, the new head of the Basij paramilitary force and a close ally of Mojtaba Khamenei, Iran’s supreme leader, recently gave a speech that painted a picture of resistance against market forces distorted by US sanctions.
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As part of this war, he said it was necessary to cut petrol consumption by up to 10% to reduce the need for costly imports. Avoiding unnecessary travel would be an act of patriotism, he suggested.
But these patriotic appeals increasingly seem desperate as the economic crisis worsens.
Mohsen Rezaei, the new, more hardline secretary of the supreme national security council, said: “I advise young people to start producing the products they and society need in their homes, just as they gather in public spaces.”
Mohammad Taheri, editor of the economics magazine Tejarat Farda, said the advice reminded him of Mao’s “backyard steel furnaces” during the Great Leap Forward. Mao encouraged people to make their own steel, with disastrous results.
Amirhossein Hashemi-Javid, an energy expert, said Iran’s real economic crisis was its inability to export oil due to the US blockade. “The channels for selling Iranian oil are drying up.”
“Oil that cannot reach customers from the well provides no revenue for the Iranian economy; it is simply barrels that incur increasing production, storage, and risk costs every day,” he said.
At some point, the Iranian government will have to decide if it might achieve more through diplomacy than through continued confrontation.
Only six months after starting a war, and after Trump promised protesters in January that help was on its way, the only commodity the US is now offering Iranians is deeper poverty.
Frequently Asked Questions
Here is a list of FAQs about Irans economic crisis and the new US sanctions written in a natural easytounderstand tone
BeginnerLevel Questions
1 Why is Irans economy in a crisis right now
Irans economy is struggling because of a mix of longterm problems heavy international sanctions high inflation a weak national currency and a lot of government mismanagement The new sanctions make it even harder for Iran to sell its oil and do business with other countries which cuts off major sources of income
2 What are these new sanctions and what do they actually do
The new US sanctions are rules that punish any company or country that buys Iranian oil or does business with certain Iranian banks They basically cut Iran off from the global banking system and make it illegal for foreign companies to pay Iran for its main export This means Iran earns less money to import food medicine and raw materials
3 How does this affect ordinary Iranian people
It affects them a lot Because the country earns less money the value of the Iranian rial drops This makes imported goods much more expensive Peoples salaries dont go up as fast as prices so their savings shrink and they cant afford basic goods Many people lose their jobs as factories close due to lack of raw materials
4 Why does the US keep putting sanctions on Iran
The US says the sanctions are meant to pressure Iran to stop its nuclear weapons program stop supporting militant groups in the Middle East and stop developing longrange missiles The goal is to force the Iranian government to change its behavior by making its economy suffer
5 Can Iran just trade with other countries like China or Russia instead
Iran tries to but its hard China and Russia do buy some Iranian oil but they often pay in their own currencies or goods instead of US dollars Also these countries worry about being punished by the US if they trade too openly with Iran so they limit their dealings
IntermediateLevel Questions
6 What is the parallel market for currency and why is it so important
The official exchange rate for the rial is set by the government and is often fake The parallel market or black market
