After years of surviving sanctions, Tehran is now confronting one of the harshest squeezes in the Islamic Republic's history, according to Iranian insiders and regional sources. A U.S. naval blockade and tougher sanctions are curbing oil exports, restricting access to foreign currency and exposing growing strains in the economy.

The campaign has led U.S. and regional officials to wager that mounting economic pressure can force Tehran to allow free passage through the Strait of Hormuz, which carries about a fifth of global oil and LNG supplies. Also Read: Iran to tackle economic issues, says further attacks will be 'more painful' Their bet rests on a simple calculation: Iran is suffering more economic damage than it is inflicting.

Efforts to choke off oil exports have cut state revenues, while attempts to disrupt shipping through Hormuz have not triggered the global economic shock Tehran hoped would force Washington to compromise. Energy markets have adjusted and alternative supplies have continued to flow.

"The balance of power has tilted against Iran a bit," said Iranian analyst Arash Azizi. Iran is losing some of the leverage it had over the Strait of Hormuz because it has been unable to close it fully, he said, adding that the U.S. naval blockade was "really hitting Iran.

" Azizi said Tehran had expected disruption in the strait to trigger a major shock to the global economy and drive Washington back to the negotiating table. "It hasn't happened, really," he said. Other countries had adapted, exposing limits to Iran's ability to inflict economic pain on the region and beyond.

Whether the pressure will force concessions remains unclear, the regional sources said. Tehran has failed to impose the costs it hoped would break Washington's resolve but has shown little sign of abandoning demands for sanctions relief, access to frozen assets and recognition of its security role in Hormuz.

Still, a new formula for resolving the standoff is now under discussion between mediators and Iran, the sources said. CAN TEHRAN OUTLAST THE SQUEEZE?Three senior Iranian sources acknowledged that Washington's campaign is becoming increasingly difficult to withstand.

The latest measures have sharply restricted Tehran's ability to access foreign currency, import goods and tap global financing networks that have helped keep the economy afloat. Iranian leaders fear a worsening economy, marked by surging prices, weaker trade and pressure on household incomes, could reignite nationwide unrest that has repeatedly challenged the Islamic Republic.

Also Read: Iran claims strike on US ship in Strait of Hormuz as fighting escalates Shortages of key imports, including fuel and wheat, are becoming an increasing concern, officials said. U.S. Treasury Secretary Scott Bessent described the strategy as a "one-two punch" combining the blockade with "the toughest sanctions in history.

" "It is going to work in Iran and we are going to collapse this regime," he told CNBC. For some U.S., Israeli and regional officials, such strains strengthen hopes that economic pressure could eventually carry political consequences inside Iran by triggering unrest, widening rifts within the leadership and weakening its grip on power.

Others remain sceptical that economic and military coercion will produce a political rupture, pointing to decades of failed efforts to destabilise the Islamic Republic and Tehran's willingness to suppress dissent. They argue Iran's rulers may again prove more resilient than their adversaries expect.

THE RESILIENCE TESTDennis Ross, a former U.S. negotiator, said Washington may be interpreting Iran's economic distress as evidence of strategic success when the reality is more complicated. Tehran remains determined to demonstrate it can control Hormuz, but appears to be calibrating its use of force while keeping further escalation in reserve.

The Revolutionary Guards may believe Iran can absorb the economic pain and outlast the pressure rather than compromise, Ross said. "The Iranians have consistently surprised us in terms of their resiliency," he added, saying he doubted economic and military pressure alone would force a retreat.

Hardliners, he said, may believe they can endure and ultimately secure what they want. Resilience may depend as much on public tolerance as Tehran's ability to absorb economic hardship, said Burcu Ozcelik, a senior research fellow at the Royal United Services Institute.

"Of course, the economic squeeze raises the risk of public unrest, but for now, a wartime mentality appears to have a significant hold over the population," said Ozcelik. "Foreign military intervention, civilian casualties and the perception of a wider civilization confrontation with a U.

S.-led order are sustaining a degree of 'Iran-first' patriotic support, tolerance or simply patience with the regime." The result is a more stubborn impasse than Washington may have anticipated. Economic pressure is deepening the pain, but Tehran's powerful Revolutionary Guards may see endurance, backed by the threat of escalation, as leverage rather than a reason to concede.

The key question is not whether Iran is hurting, but whether it is hurting enough to compromise before either side slips toward another confrontation, the regional sources said. Ross said the clearest path to a deal may lie in the dispute over shipping fees through the Strait of Hormuz.

Iran could abandon any demand for a toll while retaining the right to charge for legitimate navigational, security or environmental services, he said. Such an arrangement could give both sides a claim to victory, allowing Tehran to step back without appearing to capitulate.

"If you could announce that the Strait were reopened," Ross said, "I think Trump would do a deal.

Listen to this article in summarized format Six months after U.S.-Israeli strikes against Iran, the war appears to be at a stalemate. A preliminary ceasefire accord reached in June has unravelled and little progress has been made in diplomatic efforts to get the peace process back on track.

After a pause in military action for much of July, tit-for-tat strikes have resumed with U.S. Central Command saying it hit three Iranian tankers on Saturday in response to Iran's Islamic Revolutionary Guard Corps launching ballistic missiles at two U.

S. Navy ships. Following the attacks, Iran's Parliament Speaker Mohammad Baqer Qalibaf said on Sunday that the U.S. should understand that the rules of the game in the war against Iran have changed "before it is too late". "From now on, any attack against Iran's interests and security will receive a faster, heavier and more painful response," he said in a speech published on his Telegram channel.

Tehran has shown it still retains the capability to attack U.S. interests in neighbouring countries and to shut down oil flows through the Strait of Hormuz, through which a fifth of global oil supplies flowed prior to the conflict. SANCTIONS, OIL BLOCKADE SQUEEZE ECONOMY However, the U.

S. campaign to throttle Iran's economy by blockading its oil exports and stopping sanctions evasion is growing increasingly difficult to withstand, three senior Iranian sources have said. In his speech on Sunday, Qalibaf added that alongside the military front, Iran's main battle was now over production and people's livelihoods.

He cited sharp currency fluctuations, inflation, unemployment and market management as major challenges, adding Iranians could tolerate hardship but not mismanagement or inaction and expected the government to act quickly. Iran's Economy Minister Ali Madanizadeh said that Tehran planned to respond to U.

S. economic pressure with reforms and rejected the idea that sanctions would cause it to change course, according to state media on Sunday. "They speak of economic pressure and isolation, of breaking off financial ties and they think that by pressuring the economy of a country they can change the decisions of its people," Madanizadeh said.

"I have to clarify one point: the responsibility of reforming Iran's economy is with its government and people, not with the U.S. Treasury." Separately, Economy Ministry deputy Morteza Zamanian said on Sunday that the ministry's "Economic War Headquarters" was doubling down on its work to resolve problems caused by the war, according to the semi-official Tasnim news agency.

KHARG ISLAND HIT 550 TIMES IN PRIOR MONTHS, IRAN SAYS Iran is the third-largest producer in the Organization of the Petroleum Exporting Countries and exported 90% of its crude via its Kharg Island export hub before the war. Flows have been disrupted since a U.

S. blockade of Iranian oil exports began in mid-April. On August 31, Trump issued a one-line social media post accompanied by an AI-generated video depicting Kharg Island being "blown to smithereens." Iranian authorities have vowed a strong response if Kharg is attacked.

In an interview aired on state TV on Sunday, Iran's Oil Minister Mohsen Paknejad said the island had been hit around 550 times in previous months but continued to operate. Iran has also imposed a blockade on the Strait of Hormuz, creating an issue for U.

S. President Donald Trump by pushing up fuel prices globally ahead of midterm elections for his Republican Party in November. On Saturday, U.S. Central Command said it struck three Iranian vessels, including one off the coast of Kharg Island, after Iran's Islamic Revolutionary Guard Corps launched ballistic missiles at two U.

S. Navy ships. "Let the message to the IRGC be clear: If you shoot at two of our ships, we will impose an even higher economic cost - taking out three of yours," said Admiral Brad Cooper, head of U.S. Central Command, which oversees the U.S. military in the Middle East.

The IRGC responded by threatening intensified strikes against U.S. military vessels in the region, and said later it targeted the three tankers as well as three U.S.-linked vessels in other areas. "Do not be deceived by the 'terrorist' U.S. military and refrain from any suspicious movement aimed at passing through unauthorized waterways," the IRGC Navy said in a statement carried on Iranian state TV.

"Otherwise, you will be targeted." Tasnim, the semi-official Iranian news agency, had reported that four U.S. missiles hit a tanker in the area of Kharg's anchorage. Tasnim quoted local sources as saying there were no casualties and the tanker's crew was being evacuated.

No American personnel were harmed, Central Command said. On Sunday, Tasnim reported that the IRGC had shot down a U.S. surveillance balloon over Erbil in northern Iraq, describing it as part of a broader effort to eliminate U.S. aerial surveillance and early-warning systems in the region.

- Iranian parliament speaker Mohammad Bagher Ghalibaf warned that future attacks on Iran would receive a “faster, heavier, and more painful” response. - U.S. Central Command said American forces struck three Iranian crude carriers after Iran’s Revolutionary Guard launched missiles toward two U.

S. Navy warships. - Ghalibaf also acknowledged "fundamental challenges" such as inflation, unemployment and exchange-rate volatility as Iran faces sanctions and disruptions to its oil trade. Iran's "proportionate responses" to U.S. attacks are over, the country's parliament speaker and top negotiator Mohammad Bagher Ghalibaf said Sunday, while acknowledging the economic impact of the war.

"If they haven't understood by now, they should understand before it's too late that the rules of the game have changed and that from now on, any violation of Iran's interests and security will receive a 'faster, heavier, and more painful' response," Ghalibaf said in a post on Telegram.

But Ghalibaf added that alongside the military conflict, Iran faces severe economic pressures. "Severe fluctuations in the exchange rate, inflation, unemployment, and market management are fundamental challenges that have put serious pressure on people's livelihoods," Ghalibaf said.

He also stressed the need to rely more on domestic production and use technology to "devise short-term and permanent solutions." Ghalibaf's remarks come after U.S. forces struck three Iranian crude oil carriers. U.S. Central Command said it permanently disabled one crude oil carrier off the coast of Kharg Island and one near Jask.

Another oil tanker was attacked in the Gulf of Oman. CENTCOM said the attacks were in retaliation for ballistic missiles the Islamic Revolutionary Guard Corps launched toward two Navy warships in the region. According to CENTCOM, a U.S. aircraft carrier and guided-missile destroyer successfully evaded multiple attacks, and no American personnel were harmed.

"Let the message to the IRGC be clear: If you shoot at two of our ships, we will impose an even higher economic cost —taking out three of yours," Admiral Brad Cooper, CENTCOM commander, said in a statement Saturday. "We will not hesitate to defend American forces, and if necessary, destroy Iran's limited and exposed oil fleet.

" Defense Sec. Pete Hegseth later wrote in a post on X: "It's simple: if Iran shoots at U.S. ships, we will destroy (and sink) their oil tankers. All they have to do is not shoot at @USNavy." Iran is the third-largest producer in the Organization of the Petroleum Exporting Countries and exported 90% of its crude via Kharg Island before the war.

Flows have been disrupted by a U.S. blockade of Iranian oil exports, which began in mid-April. The conflict between Iran and the U.S. has effectively shut the Strait of Hormuz, a key waterway for the world's oil supply before the war began on Feb. 28 with American and Israeli airstrikes.

U.S. President Donald Trump threatened in June to seize Kharg Island as the U.S. continued military strikes against Iran. Most recently, on Aug. 31, he posted an artificial intelligence-generated video of Kharg Island being blown up. Tightening sanctions The strike on the oil tankers came a day after the Treasury Department announced sanctions against a small Turkish investment bank and two of its subsidiaries, which the U.

S. accuses of facilitating funds for an arm of Iran's Revolutionary Guard. The measures are part of sweeping sanctions the Trump administration launched in late August targeting Iran's access to digital assets, advanced technology procurement, gold reserves, commercial aviation and shipping.

Iranian President Masoud Pezeshkian said late last month that the country's trade has fallen sharply. Iran's gross domestic product is estimated to have contracted by 2.7% in the year ending March, according to the World Bank, citing economic disruption from last year's widespread protests and intensified hostilities in the region.

Inflation surged to 62.2% in February, with food price inflation reaching a historical high of 99%, according to the World Bank. An Iranian official estimated that the war has caused the loss of one million jobs, according to the New York Times.

US and Iran trade strikes as tensions escalate amid renewed conflict - US Central Command has struck three Iranian oil tankers, including one near the Kharg Island export hub, after Iran's Islamic Revolutionary Guard Corps fired ballistic missiles at two US Navy vessels.

- Admiral Brad Cooper declared that the US would exact a higher economic cost for attacks on its ships, confirming that no American personnel were harmed during the strike. - Iran's Revolutionary Guard retaliated by threatening further attacks on US military ships, claiming to have targeted three US-linked vessels and three tankers navigating unauthorised routes in the Strait of Hormuz.

- The Iranian Red Crescent has requested an International Criminal Court investigation into a suspected US strike on an Iranian wedding that left at least five people dead, accusing Washington of war crimes. - The recent exchanges represent a dangerous deepening of the wider conflict between the US, Israel, and Iran, which has flared repeatedly since initial strikes in February.