The United States has blockaded Iranian ports since June and imposed increasingly tough sanctions as Iran and the United States negotiate an end to their seven-month war. On Tuesday, the U.S. Treasury Department announced sanctions against 10 people and entities in Iran, Hong Kong and Pakistan, accusing them of procuring weapons and components for Iran’s defense ministry.
Blockade and sanctions
Iranian officials said Wednesday they had received an official U.S. response to Tehran’s latest proposal to end the war. They didn’t disclose its contents or say whether Washington had rejected it. Iranian Foreign Minister Abbas Araghchi presented the response to President Masoud Pezeshkian at a Cabinet meeting, government spokesperson Fatemeh MoHajjerani told the state-run IRNA news agency.
“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 returned from New York, where he attended last week’s UN General Assembly and held indirect talks with U.S. officials. He also met Qatari and Pakistani mediators on the sidelines of the gathering.
Araghchi briefed the Cabinet on Iran’s conditions for reopening the Strait of Hormuz, which MoHajjerani said Iran had 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, saying Iran wanted a deal because it was “losing so badly” and that its offer “would not be acceptable.” Mediators continued working with both governments to try to broker an agreement to end the fighting and open the strait, officials said. The officials spoke anonymously because they weren’t authorized to comment publicly.
The Treasury Department said its latest sanctions targeted people and companies it accused of acting as financial facilitators or enablers of Iran’s military supply chain. The measures form part of the Trump administration’s “Operation Economic Outcast” campaign, which it says aims to sever “critical financial lifelines” for Iran’s already heavily sanctioned government.
Economic pressure and oil markets
Iran’s economy faced heavy strain before the war and has plunged since the conflict began in late February. The rial fell to a record low on Tuesday, with traders in Tehran exchanging more than 2.5 million rials for a U.S. dollar. The currency had hit its previous record low of 2.2 million to the dollar on Sept. 2, 27 days earlier.
Medication prices have soared. Some treatments are hard to find, and some medicines have more than tripled in price. Food and other goods have also become much more expensive as unemployment has risen and the rial has lost half its value. The United States has sought to damage Iran’s economy through the port blockade and increasingly tough sanctions, while Iran has tried to push global energy prices higher with attacks on regional oil-shipping routes.
Oil prices were nearly flat in early Asian trading Thursday, Oct. 1, as investors assessed the talks and the outlook for Middle Eastern crude exports. Brent crude futures rose 12 cents, or 0.1%, to $98.15 a barrel by 0045 GMT; U.S. West Texas Intermediate crude fell 7 cents, or 0.1%, to $90.35. Both benchmarks had risen about $1 a barrel on Wednesday. Brent gained around 14% in September, its biggest monthly increase since July, while WTI rose about 5% for the month.
“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. Qatar said Tuesday it hoped shuttle diplomacy between Tehran and Washington could lead to a breakthrough.
Threats and domestic unrest
Trump threatened on Wednesday to “blow them up” if the United States and Iran didn’t reach a deal soon. “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.
Also on Wednesday, two men were executed in Iran over their role in violence during nationwide anti-government protests in January, IRNA reported. Citing the judiciary, the news agency said the men took part in unrest in Mashhad that left four members of the security forces dead. Iran’s Supreme Court upheld their death sentences, and authorities carried them out Wednesday morning.
The unrest began Dec. 28 amid anger over the collapsing currency and worsening economy, then spread as demonstrators increasingly called for the overthrow of the Islamic Republic. Iranian authorities responded with a deadly crackdown. Rights groups say thousands were killed and tens of thousands arrested; Iranian authorities have reported a substantially lower death toll.