US Blockade, Iran’s Rulers: Civilians Face the Cost

U.S. Treasury Secretary Scott Bessent forecast that Iran’s economy could contract by more than 25% in the year ending March 2027, while warning people to prepare for winter fuel shortages. In an interview with Iran International’s Kambiz Tavana in Washington on October 26, Bessent said the pressure campaign was aimed at Iran’s leadership, not its population. His warning described the gap plainly: Washington says it is targeting rulers, while ordinary people are told to stock up on fuel and brace for shortages.

Pressure from Washington

Bessent said Iran was running short of foreign currency, oil production was beginning to falter, and the government was printing money, failing to pay salaries and cutting social benefits. He said humanitarian channels remained open for food and medicine, but also told Iranians: “don't pay your taxes because you're not going to get anything back from the government.” He advised them to stock up on heating fuel and fill their gasoline tanks.

The measures bearing down on Iran include a U.S. naval blockade that sharply curtailed oil exports and an expanding sanctions campaign targeting remaining sources of foreign currency. Bessent said, “Iran, for the first time, probably since oil was discovered, has no oil on the water,” and added that there had been no loadings at Kharg Island. Iranian officials continued to demand that Washington lift the blockade.

Bessent said Washington remained prepared to negotiate, while insisting Iran could not have a nuclear weapon and must stop financing regional armed groups. He rejected the idea that U.S. midterm elections would change President Trump's approach, saying the blockade would remain. Asked about historical comparisons, he cited the U.S. campaign against Venezuela but said, “There's been nothing like this.”

Tehran’s rulers and the money trail

Bessent said economic pressure was exposing disagreements among Iranian politicians, the Revolutionary Guards and the supreme leader. He described some IRGC commanders as isolated from the public and unaware of the scale of economic deterioration. Iran’s government, meanwhile, faces the consequences of its own economic decisions: Bessent said it was failing to pay salaries and cutting social benefits as it struggled to pay for imports.

The Treasury secretary appealed to people handling Iranian government money overseas, saying financial intermediaries known in Iran as “trustees” were refusing to return funds to Tehran. He said people in Iran, members of the diaspora, and embassy and consulate employees could provide information through the Treasury’s whistleblower program, which offered rewards of up to 30% of recovered funds. “We are happy to unsanction individuals who work with us,” he said.

Bessent said the Treasury was tracking attempts to move money through cryptocurrency and foreign banks. He named a large Pakistani bank, the Dubai branches of an Egyptian bank, a Turkish bank and VTB, the second-largest Russian bank, saying external branches outside Russia had aided the Iranian government. His account presented financial intermediaries with a choice shaped by sanctions: return funds, face scrutiny, or cooperate with Washington for a possible share of recovered money.

Markets, factories and bargaining

Crude prices rose above $116 a barrel on October 24 after reports of two attacks involving supertankers near Oman. Kayhan framed the increase as vindication of the Islamic Revolutionary Guard Corps Navy’s strategy of asymmetric pressure around the Strait of Hormuz. Under the headline “Minefields near Musandam Prove Diplomacy Is Obsolete,” it argued that shipping disruption had strengthened Iran’s bargaining position and accused moderates and pragmatic conservatives of “begging for an agreement.”

Shargh offered the opposing reading: higher crude prices did little for private-sector manufacturers facing bankruptcy, and keeping negotiations with Washington alive was essential to Iran’s economic survival. Donya-ye Eghtesad reported pressure on factories in Isfahan, Tabriz and Arak, alongside an unprecedented wave of corporate bankruptcies amid the maritime blockade. The price signal that Kayhan treated as leverage sits beside factories under pressure and workers facing a deteriorating economy.

Former deputy parliamentary speaker Ali Motahari said on Monday that an agreement with Washington appeared more likely than renewed conflict, citing problems facing the United States and the possibility it might accept some Iranian conditions. Regional officials from Saudi Arabia, Pakistan and Turkey were in Tehran on October 26 for talks with national security chief Mohsen Rezaei and Foreign Minister Abbas Araghchi. Tehran said it had resubmitted a proposal to restore shipping through the Strait of Hormuz in stages and that technical negotiators were examining U.S. counterproposals on lifting the blockade. The state negotiators continue to bargain over access, shipping and security; the people facing fuel shortages and factory closures have no seat identified in those talks.