Iran Unveils Coordinated Economic Response as US Blockade Deepens Financial Pain

Iranian President Masoud Pezeshkian has launched a coordinated government effort to shield ordinary citizens from the worsening economic fallout of the US-Israeli war and the American naval blockade, signaling that Tehran is preparing a structured response to what officials describe as a deliberate campaign to sever the country's economic lifelines.

The president convened a meeting with several cabinet members in recent days to discuss ways of softening the impact of the conflict, which has driven the national currency to record lows and triggered a mounting cost-of-living crisis. The gathering focused on measures intended to ease the financial strain on Iranian households as the war, which began on February 28, continues with no clear end in sight.

In remarks published on social media, Pezeshkian accused Washington of pursuing a strategy aimed at cutting off the country's vital arteries in order to pressure the Iranian people. He framed the government's new initiatives as a direct counter to that approach, though the full scope of the measures has not been made public.

According to Iran's semi-official Tasnim news agency, the country's Plan and Budget Organisation presented a seven-point package during the meeting designed to help the country navigate the challenges ahead in a more orderly and less costly manner. The specifics of the plan remain undisclosed, but its presentation at such a high level suggests the government views the economic situation as increasingly urgent.

The day after the meeting, Pezeshkian ordered the creation of a committee to coordinate the new economic arrangement. The body includes central bank governor Abdolnaser Hemmati, Interior Minister Eskandar Momeni and Tehran's conservative mayor Alireza Zakani. State broadcaster IRNA reported that the committee's primary objective is to stabilise prices across the country.

The economic picture has deteriorated sharply since the war erupted. US and Israeli strikes have killed senior Iranian political and military figures, and bombing campaigns have inflicted an estimated 270 billion dollars in damage on the country. The situation worsened further in late August when Washington launched Operation Economic Outcast, an initiative aimed at completely isolating Iran from international trade.

The combined effect has been severe. Iran's gross domestic product has contracted by 10 percent as energy exports collapsed under the weight of the US naval blockade, and the Iranian rial has tumbled to unprecedented lows. Tehran has made the lifting of the blockade a central demand in negotiations with Washington over the reopening of the Strait of Hormuz, which Iran has said will remain closed until the United States meets its conditions.

Maryam Ashrafi of the Bourse and Bazaar Foundation, a London-based think tank, told Al Jazeera that Iranian consumers are feeling the squeeze most acutely through higher food prices. As a result, she said, households are increasingly turning to cheaper, inferior goods in an effort to cope.

Shortages of raw materials used in the production of some staple items, including margarine, have also pushed prices higher. Imports of wheat and grains have fallen sharply because of the naval blockade on Iran's southern ports, which has disrupted the large bulk carriers that normally supply the country.

Ashrafi noted that such vessels can carry upwards of 80,000 tonnes of agricultural commodities. By contrast, ships using alternative routes through Caspian Sea ports, which are not subject to the embargo, carry loads of only about 7,200 tonnes, while trucks using land routes are limited to roughly 20 tonnes per vehicle. The disparity underscores how difficult it will be to replace the lost seaborne capacity.

Businesses are also contending with rising costs for packaging, which has contributed to supply chain disruptions across multiple sectors. Insurance premiums have climbed as well, even though war-related losses are generally excluded from coverage, adding another layer of financial pressure on companies already struggling to stay afloat.

While medicines themselves are not subject to sanctions, the raw materials needed by Iran's pharmaceutical industry have become increasingly difficult and expensive to obtain, according to Ashrafi. Disruptions to air travel caused by US sanctions on Iranian airlines have compounded fears of medicine shortages, a concern that has grown more pronounced in recent months as the blockade tightens.

In his remarks to members of parliament on Monday, Pezeshkian said economic policy should prioritise the most vulnerable groups in society, singling out female-led households as a key focus. He also identified energy efficiency as one of the principal ways of addressing the country's current difficulties.

The president pledged that electricity and energy supplies to producers and businesses would not be cut off under any circumstances. To conserve energy, he called for the implementation of car-free Tuesdays, during which citizens would refrain from using their vehicles, and urged state employees to embrace the initiative as a way of encouraging broader public participation.

The emphasis on energy conservation reflects a paradox at the heart of Iran's predicament. Despite being a major oil and gas producer, the country has suffered from petrol shortages and has experienced power cuts since the war began, underscoring how the conflict and blockade have disrupted nearly every facet of the economy.

The newly formed coordination committee is expected to play a central role in rolling out the government's response, though analysts caution that the measures outlined so far may struggle to offset the scale of the damage. With the rial in freefall, trade routes constrained and public anxiety rising, the success of Pezeshkian's initiative will likely depend on whether Tehran can secure relief from the external pressures driving the crisis.