The United States’ naval embargo on Iran is strangling the Islamic Republic’s main economic corridors — with Tehran facing an oil storage crisis and its citizens grappling with rising food prices and rising unemployment.
However, unless Washington is ready to impose its months-long naval blockade, it will be difficult to completely dismantle an Iranian economy that has spent years adapting to US pressure and crippling sanctions.
And as much as Iran suffers, its leaders will know that Trump is also under pressure, with the US president facing a growing backlash over a civil war and crucial midterms looming. Tehran may have anticipated that Trump would blink first.
Just three months ago, the Iranian government was on the brink of collapse after people took to the streets nationwide to protest its poor handling of the economy. The same government was given a lifeline when the US and Israel invaded and is now using the pretext of war to justify the miserable economic condition of a nation of 92 crores.
On January 8, cars are burned in the streets during a protest against the collapse of the currency in Tehran, Iran. – Stringer/WANA News Agency/Reuters
“Iran faced the most pressure campaign during Trump’s first term, and it was forced to cut its oil production in half,” Esfandyar Batmangelidz, CEO of think-tank Borse & Markets, told CNN.
“If the embargo lasts for months, it will definitely affect Iran’s economic outlook, but Iran’s expectation is that the US will not tolerate that pressure for long.”
What began more than ten days ago as a blockade of Iranian ports has expanded worldwide, with every ship bound for Iran facing scrutiny by US naval forces on its voyages.
One of the main consequences of the embargo will be to disable Iran from exporting its main commodity. If the country cannot produce millions of barrels of oil per day, it may be forced to cut production. Exports of crude oil and petroleum products are Iran’s main source of foreign exchange.
Iran can maintain current oil production for another two to three months before storage issues become a “significant consideration,” Batmangeliz said.
Iran still has plenty of oil storage space left onshore, shipping analytics firm Kepler said, adding that it has about 30 million barrels of headroom, meaning it is still weeks away from reaching its limit.
If it finds other ways to offload stored oil it could push storage capacity longer.
One option Iran is exploring is using its retired crude tankers. A large 30-year-old carrier called NASHA was spotted sailing to oil storage terminals on Kharg Island, possibly to offload oil and act as floating storage, said Tankertrackers.com, a maritime intelligence company that tracks crude oil shipments.
‘Nothing inside, nothing outside’
Until a cease-fire was announced on April 7, the US and Israel carried out almost daily attacks on Iran, killing top officials and targeting key infrastructure, including steel plants, petrochemical facilities and highways connecting cities.
For most of the war, the main American goal was to open the critical Strait of Hormuz. But when Iranian negotiators failed to reach a deal with their U.S. counterparts this month, President Donald Trump switched tactics to what his Defense Secretary Pete Hegseth called an “ironclad” naval blockade of Iran from the Gulf of Oman to the “open oceans.”
The sun rises behind a tanker anchored in the Strait of Hormuz off the coast of Qeshm Island, Iran, on April 18. – Asghar Besharati/AP
“For the regime in Tehran, the blockade is tightening by the hour. We are in control. Nothing in. Nothing out,” Hegseth said at a press conference on Friday.
The US move comes in response to Tehran’s decision to block the Strait of Hormuz and impose unofficial tolls on ships passing through this critical maritime chokepoint, which facilitates more than a fifth of the world’s oil and gas exports, leading to a sharp rise in oil prices.
“The Straits cannot run under threat. And let’s call the payment for safe passage what it is: a security racket. Hormuz belongs to the world. It should be returned to the world. Exactly as it was,” Sultan Al Jaber, CEO of Abu Dhabi’s state oil giant ADNOC, said last week at X.
Southern Iran is the backbone of the country’s trade and economy, most of which is exported through oil terminals. While Iran has land borders for some overland trade, the southern coastline does not compare. Kharg Island alone exports 90% of Iran’s crude oil while other locations along the coast give Iran an option to send oil beyond the Strait of Hormuz.
A satellite image shows an oil terminal on Iran’s Kharg Island on February 25. – 2026 Planet Labs PBC/Reuters/File
The ongoing US naval blockade further restricts these southern terminals beyond the Strait of Hormuz.
A war with Iran also threatens the world’s supply of aluminum, plastic and rubber. The Middle East transports 25% of the world’s polypropylene and 20% of polyethylene, two of the most widely used plastics. It also contains a quarter of the world’s sulfur and 15% of its fertilizers.
Ships arriving or departing from Iranian ports have been diverted, Hegseth said, adding that as of Friday 34 ships had been detained in the region, with two other Iranian-related vessels seized in the Indo-Pacific. Publicly, at least, the US insists it will not back down.
“No matter what President Trump decides, the embargo will happen,” Hegseth said.
Be aware, says the Supreme Leader
If Iran is forced to turn to alternative import routes, such as its land border or the Caspian Sea to the north, this could push the already inflated prices of goods even higher.
One million jobs have been lost in Iran and two million people’s jobs have been affected by the war, Iran’s Deputy Labor Minister Gholamhossein Mohammadi was quoted as saying by state-affiliated media.
Another 130,000 workers lost their jobs after their factories closed, Alireza Mahzoub, an official at Iran’s labor ministry, told the Iranian Labor News Agency (ILNA).
The Iranian government says there are no shortages of goods and despite “pressure, embargoes and maritime embargoes”, the country’s food supply chain is fully functional with 85% of agricultural products and basic goods produced domestically.
People shop at a supermarket in Tehran, Iran on April 11 amid live Iran-US talks in Islamabad, Pakistan. – Morteza Nicoubajal/Nurfoto/Getty Images
A resident of Tehran confirmed to CNN that markets remain stocked, even as prices of basic goods such as chicken, rice, eggs and medicine have tripled or quadrupled.
But while many American voters worry about rising gas prices, Iranians are more accustomed to such hardships.
“The wartime goal for Iran’s leadership is not to run a normal economy,” Batmangelidz said. “The goal is to keep the economic machine going as long as possible and I think they can manage that.”
The country’s president, Massoud Pezheskian, acknowledged that there are some fuel shortages that require “careful planning” and “public support”, but described what the government has achieved as “divine grace”.
Iran’s new Supreme Leader Mojtaba Khamenei, who has not been seen or heard from since his appointment last month, in a written statement called on people to “consider each other so that the pressure caused by deprivation – which is a natural effect of any war – is reduced on different sections of society.”
There have been tentative signs of movement in talks this weekend, with US ambassadors expected to follow Iran’s top diplomat to Pakistan, where mediators are keen to resume talks. But Tehran has faced decades of US hostility and — unlike Washington — has more than short-term considerations at play.
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