Iran admits its economy is affected by US sanctions

“Some people say sanctions have no effect at all, I really don’t know what to say to those people. We are in a state of war and have to live with these wartime conditions,” Iranian President Masoud Pezeshkian said on state television on the evening of August 28.

He pointed out that Iran’s imports and exports have decreased by 25-35% in recent months due to the seaport blockade campaign conducted by the US. To deal with the trade deficit and budget shortage, President Pezeshkian proposed considering increasing gasoline prices.

“We should increase the gasoline price for the third-tier quota, from 5,000 toman ($0.02) to 10,000 toman ($0.04),” he proposed.

In Iran, the price of gasoline people pay is calculated according to different consumption quotas. As one of the world’s largest oil producers, Iran has subsidized gasoline for years to keep fuel prices super cheap. Any change in gas prices could also lead to political upheavals.

Supreme Leader Ayatollah Mojtaba Khamenei on the same day called on the government to urgently resolve economic difficulties. “It is necessary to seriously address a series of economic and livelihood challenges, such as inflation, unemployment, price management and goods and services markets,” said a written statement attributed to Mr. Khamenei.

Vice President Mohammad Jafar Ghaempanah on August 26 also admitted that the seaport blockade campaign prevented Iran from importing enough gasoline to compensate for the lack of domestic production.

US Treasury Secretary Scott Bessent on August 24 announced a plan to “economically strangle” Iran, and warned of consequences for countries that do not respond to Washington’s campaign. The plan continues a series of sanctions imposed by the US and its allies since 2018, when President Donald Trump withdrew from the nuclear agreement signed by major powers with Tehran.

Iran immediately threatened to launch a fair response, announcing that it would expand attacks on oil-producing countries in the region and European countries, while also implying the ability to create nuclear weapons.

“We have been playing chess for a long time and have also learned how to play poker. Currently, we are combining both games,” Iranian Foreign Ministry spokesman Esmail Baghaei told reporters earlier this week.