Abstract:Tehran's hardline rhetoric belies a brutal reality facing the regime and Iranian citizens: its economy, vulnerable even before the war, is now in tatters.
The war in the Middle East is plunging Iran's already fragile economy into freefall.
Tehran's primary war tactic has been economic damage. Iranian strikes have targeted the energy infrastructure of its neighbors and instituted a blockade on the vital Strait of Hormuz, through which around 20% of the world's oil and gas was shipped before the war, precipitating the worst energy shock in decades.
But its own economic position is precarious.
Before the conflict, Iran was already under pressure due to sanctions. Inflation exceeded 50% in 2025. Its currency, the rial, had lost 60% of its value in the months after the 12-day war against the U.S. last July.