Iranian Rial Loses Nearly a Quarter of Its Value as Inflation Hits 90% Under Blockade and Sanctions

Key Facts

A U.S. Treasury Department report obtained by Axios said the naval blockade, sanctions and disruption of overland export routes had put pressure on Iran’s economy and reduced its ability to generate revenue. According to the report, the Iranian rial has lost about a quarter of its value since the operation began in August, with its unofficial rate hitting a record 2.687 million rials per dollar in October. Annual inflation rose to 90% in September, compared with about 35% in early 2025. The figures put the currency and prices among the leading pressures on Iran’s economy identified by the report. But it does not say Iran’s government is close to collapse.

The report linked the revenue decline to disrupted oil exports, saying Iran had loaded no oil onto tankers since August 25 because of the blockade and sanctions. It added that Tehran had sold the remainder of its oil stranded at sea, citing data from maritime trade tracker Kpler. This followed a brief easing of restrictions: Iranian President Masoud Pezeshkian said his country sold about 90 million barrels during the brief memorandum of understanding with the United States in June, when Washington allowed oil sales. The contrast between June’s sales and the halt in loading since late August illustrates the shrinking oil outlet Tehran relies on to generate revenue. In October, the U.S. Treasury said the blockade had reduced Iranian oil shipments escaping the blockade, linking this to mounting economic pressure through Operation Economic Outcast.

Pressure also spread to overland trade, as attempts to reroute shipments across Iran’s borders with Pakistan, Turkey, Afghanistan and Turkmenistan ran into difficulties. The report said thousands of trucks were stranded at the Turkish border, with delays of up to 20 days, while hundreds of trucks waited at the Pakistani border. As a separate indication of the impact of restrictions on air traffic, the report said the United Arab Emirates, Oman, Iraq and Georgia and Azerbaijan had barred Iranian airlines and canceled flights to Iran. It also said Turkey had suspended all Mahan Air flights. The measures, as described in the report, show that restrictions affected commercial and air transport as well as oil exports.

Pezeshkian acknowledged in August that exports and imports had fallen by about 35% because of U.S. sanctions and the naval blockade of Iranian ports. Annual inflation was 66% in July, according to a Reuters report, before reaching 90% in September, according to figures in the Treasury report. In its July update, the International Monetary Fund projected a 5.4% contraction in Iran’s gross domestic product and a 68.9% rise in consumer prices during 2026; both are annual estimates, not final outcomes. In a separate report on the crisis’s impact on households, Reuters reported that Iranians had begun cutting spending on food, housing and education. These pressures follow Pezeshkian’s statement that the war and sanctions were affecting trade, while the new report adds indicators of disrupted shipments and transport routes.

The Treasury Department announced the operation targeting illicit revenue sources and sanctions-evasion networks on August 24, led by Treasury Secretary Scott Bessent and coordinated with U.S. government agencies and partners including the European Union, the United Kingdom and Gulf partners. Axios reported that U.S. officials believe the sanctions campaign needs more time and could prompt Iran’s leadership to make concessions in negotiations. It quoted them as saying the campaign “needs more time to destabilize the regime,” an assessment by officials of its goal, not proof that concessions have been made or that a collapse is imminent. U.S. President Donald Trump met with senior national security and foreign policy advisers on Thursday to discuss the war. On October 26, delegations from Saudi Arabia, Pakistan and Turkey met in Tehran in an effort to avert renewed fighting; a deal brokered by Pakistan and Qatar in June had aimed to reopen the Strait of Hormuz, end the blockade and begin broader negotiations, but quickly fell apart.