Some medicines in Iran have more than tripled in price, while certain treatments have become hard to find as a U.S. blockade and stepped-up sanctions squeeze the pharmaceuticals industry. The strain comes seven months into Iran’s war with the United States and Israel. Food and other goods have grown much more expensive. Unemployment has risen. The currency has lost half its value.
On Tuesday, the rial fell to a record low. Traders in Tehran exchanged more than 2.5 million rials for a U.S. dollar. Its previous record, 2.2 million to the dollar, came on Sept. 2, 27 days earlier. The rial has repeatedly hit new lows since the war began in late February.
The Humanitarian Picture
Two pressures are hitting Iran’s economy at once. Iran has tried to push global energy prices higher by attacking regional oil-shipping routes. The United States has sought to damage Iran’s economy with a blockade of its ports since June and increasingly tough sanctions. Iran’s economy faced heavy strain before the war and has been in free fall since it began.
On Tuesday, the U.S. Treasury Department announced new sanctions under the Trump administration’s “Operation Economic Outcast” campaign. The campaign aims to sever “critical financial lifelines” for the already heavily sanctioned Iranian government. Ten people and entities based in Iran, Hong Kong and Pakistan face sanctions over accusations that they procured weapons and weapon components for Iran’s defense ministry.
Two men were also executed in Iran on Wednesday over their role in violence during nationwide anti-government protests in January, the state-run IRNA news agency reported. Citing the judiciary, IRNA said the men took part in unrest in Mashhad that left four members of the security forces dead. Iran’s Supreme Court had upheld their death sentences. The unrest began Dec. 28 amid anger over the collapsing currency and worsening economy, then spread nationwide as demonstrators increasingly called for the overthrow of the Islamic Republic. Authorities answered with a deadly crackdown. Rights groups say thousands were killed and tens of thousands arrested. Iranian authorities have reported a substantially lower death toll.
Diplomatic Options
Iranian officials said Wednesday that they had received an official U.S. response to Tehran’s latest proposal to end the war. They didn’t say what it contained or whether the United States had rejected it. Foreign Minister Abbas Araghchi presented the response to President Masoud Pezeshkian at a Cabinet meeting, government spokesperson Fatemeh MoHajjerani told IRNA.
“We will make every effort to bring the agreement to fruition and will firmly stand up for the rights of the Iranian people,” Pezeshkian said. “The agreement must now be based on a win-win strategy.”
Araghchi had just returned from New York, where he attended last week’s UN General Assembly. Iranian and U.S. officials held indirect talks there, and Araghchi met Qatari and Pakistani mediators on the sidelines. He briefed the Cabinet on Iran’s conditions for reopening the Strait of Hormuz, which MoHajjerani said had been conveyed through mediators. Last week, Araghchi said he had proposed reopening the strait within a week if the United States lifted its blockade of Iranian ports, released frozen Iranian assets and waived sanctions on Iranian oil sales, among other conditions.
President Donald Trump had publicly rejected the proposal days earlier. He said Iran wanted a deal because it was “losing so badly” and that its offer “would not be acceptable.” Officials said mediators kept working with both sides anyway. They weren’t authorized to comment publicly and spoke on condition of anonymity. Qatar said on Tuesday it hoped shuttle diplomacy could lead to a breakthrough. Trump denied reports by Axios and CNN, citing U.S. officials, that he was willing to offer Iran sanctions relief and release frozen funds in return for “concrete” steps on its nuclear program.
On Wednesday, Trump threatened to “blow them up” if the two countries didn’t reach a deal soon, during an Oval Office exchange with reporters. “It’s going to end very soon, one way or the other,” he said. At the start of the conflict, he predicted the war would last just weeks. More recently, he said he expected it wouldn’t end until after the Nov. 3 U.S. midterm elections.
The Oil Market Watches
Oil prices were nearly flat in early Asia trade on Thursday, Oct. 1, as investors weighed the talks and the outlook for Middle Eastern crude exports. Brent crude futures rose 12 cents, or 0.1%, to $98.15 a barrel. U.S. West Texas Intermediate fell 7 cents, or 0.1%, to $90.35. Brent gained around 14% in September, its biggest monthly increase since July.
“Although buying continued amid supply concerns as peace talks stalled, selling pressure also prevailed as Middle Eastern oil exports showed signs of recovery,” said Toshitaka Tazawa, an analyst at Fujitomi Securities. He cited Saudi Arabia’s resumption of exports from its Red Sea port of Yanbu. Goldman Sachs estimated that Gulf oil exports, including “dark exports” involving ships with location transponders turned off, had recovered to 23.3 million barrels per day over the previous week, in line with their 2025 average. Two people with knowledge of the matter told Reuters that OPEC+ countries are likely to keep production targets steady for November when they meet on Sunday.
Why This Matters: Oil traders can treat progress in the talks as a price signal, and Tazawa said negotiations would need to advance for WTI to break below $88 a barrel. In Iran, the stalemate’s cost shows up in pharmacy prices, a currency that has lost half its value and rising unemployment. Mediators are still working, but Washington and Tehran remain far apart in their public positions. Trump has said he expects the war to last until after the Nov. 3 midterms. The question from a human rights perspective is how long civilians absorb the combined effects of blockade, sanctions and war while diplomacy continues. The executions in Mashhad also show domestic dissent in Iran still meets the harshest penalties, even as the economic grievances behind January’s protests deepen.