Economic War Escalates: Iran's Economy Strains Under Pressure

The conflict between Iran, the US, and Israel has escalated into an economic war of attrition. Iranian President Masoud Pezeshkian acknowledged that declining oil revenues, rising import costs, and damage to factories are putting pressure on the country's economy.

Oil is a crucial source of foreign currency for Iran, which it needs to finance imports and maintain monetary stability. When oil exports decline or become more difficult to sell, the government's ability to obtain foreign currency decreases, affecting the value of the rial and increasing import costs.

The effects spread throughout the economy: higher import costs increase production expenses, raising consumer prices and reducing household purchasing power. Factories may be forced to reduce production due to rising costs or damage sustained during the conflict, leading to lower corporate profits and tax revenues for the government.