Economic Fallout from U.S. Sanctions Fuels Iran’s Wartime Struggle
By Eman Abouhassira and Yasmine Ghani
Dubai/Cairo, Aug 29 (Reuters) – Iranian leaders are recognizing the economic burden of conflict with the United States, with the supreme leader urging the government to address the hardships while the president reported foreign trade contracted 35 percent due to American sanctions and blockades.
Warnings emerged even as other heads of state threatened U.S. retaliation and asserted that Iran retains control over the Strait of Hormuz, the strategic waterway granting leverage through potential disruptions to global energy markets.
With the crisis reaching its sixth month and talks standing idle, President Donald Trump’s administration has accelerated strategies aimed at crippling Iran financially—a plan dubbed an “economic D‑Day.”
Washington warned nations to terminate business relationships with Tehran or face secondary sanctions, yet the Treasury refused to penalize prominent trade partners such as China and India, actions that could affect U.S. and broader economies.
The Treasury also imposed sanctions on a Hong Kong‑registered entity and an individual tied to Iran’s Bank Melli, according to a notice published on the department’s website.
Egypt’s central bank confirmed coordination with U.S. officials, indicating the measure applies only to the bank’s U.S. dollars held in its UAE correspondent banks.
Additionally, U.S. authorities targeted a Hong Kong‑based entity and a person linked to Iran’s Bank Melli in separate sanctions announcements.
This initiative deepens the overall strain on Iran’s economy, where annual inflation surged to 66 percent last month.
Supreme Leader Ayatollah Khameni called on the government to confront severe economic challenges such as soaring inflation, rising unemployment, price management difficulties, and shortages in essential goods.
President Masud Pezeshkian informed state media that exports and imports slumped almost 35 percent owing to U.S. sanctions and a naval embargo restricting Iranian ports.
Yet he pointed out that Iran managed to ship approximately 90 million barrels of oil during a brief memorandum of understanding in June, when Washington temporarily permitted Iranian oil sales.
Amid the U.S. focus on fiscal pressure, diplomats pursue renewed attempts to end hostilities.
Qatarian Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani convened meetings with Iranian leaders in Tehran on Thursday, emphasizing the need to restore unobstructed shipping via the Strait of Hormuz.
Iranian Foreign Minister Abbas Araqchi characterized those engagements as “creative,” noting Qatar’s partnership with Pakistan played a pivotal role in the preceding accord.
Qatar, a U.S. ally and regional neighbor, assisted in brokering the June memorandum that briefly fostered a pause in fighting before disputes over the strait revived.
U.S. military command says American forces have harvested sea mines from the strait, which Iran’s Islamic Revolutionary Guard Corps laid months earlier.
Trump has repeatedly declared the passage open, but the IRGC’s navy rebutted this claim as false, insisting the waterway remains blocked pending Iranian clearance.
Initial shipping statistics released on Friday revealed only seven commodity vessels entered the Strait on Thursday, down from 17 the prior day and below the ten‑day average of 15.
(Reporting by Reuters staff; writing by Daniel Trotta; editing by Stephen Coates)