Iran's Economy on Brink of Collapse as Sanctions Bite

The Iranian economy is experiencing severe economic crisis, with inflation soaring to over 80% and food prices increasing by up to 180%. The rial has collapsed against the US dollar, falling below 2 million rials per dollar on the open market. According to Dr. Raz Zimmt, director of the Iran and Shi'ite Axis Program at the Institute for National Security Studies (INSS), 'the main problem is inflation.'

The World Bank estimates that Iran's economy contracted by 2.7% during the Iranian fiscal year that ended in March 2026. Dr. Zimmt notes that despite the difficult economic situation, there are currently no clear signs of widespread protests capable of threatening the regime's stability.

The US blockade is disrupting Iran's ability to export oil and other goods, with exports reportedly plunging to approximately 220,000-255,000 barrels per day in August, compared to around 2 million barrels per day in March. Dr. Zimmt warns that if demonstrations do erupt, the Iranian authorities could respond even more harshly than they have in the past.