Battered by war, Iran’s rulers wary of renewed unrest if US tightens pressure

A Regime Under Pressure

Nearly six months into the conflict with the United States, Iran's leaders continue to project resilience, but behind the scenes, they worry that a threat of more economic punishment from President Donald Trump could increase hardships, reignite unrest, and further erode the Islamic Republic's legitimacy, according to three Iranian officials who spoke to Reuters.

Trump vowed on Friday to hit Iran hard economically, a day after Treasury Secretary Scott Bessent said Washington would impose measures that have "never been seen" as early as next week. Washington has not said what those measures will entail, but Iran's officials fear the consequences.

The Islamic Republic entered the war with pre-existing structural weaknesses: high inflation, a weakened currency, energy shortages, and sanctions. Now, it faces damaged infrastructure, disrupted trade, lost production, and the cost of rebuilding. The war began with US and Israeli attacks on February 28, as reported by the Times of Israel.

Economic Hardship at Home

Iran's leaders have acknowledged the persistent pain. President Masoud Pezeshkian admitted, "Our problems have multiplied several times over, while our income has also fallen." Official figures compiled by Reuters show that Iran's annual inflation rate reached 66% in July, with consumer prices 87.9% higher than a year earlier and food inflation at 128% year-on-year. Housing costs have risen sharply—rents were up 31% year-on-year in March, and Tehran housing prices roughly 50% above last year. Wages have struggled to keep pace: Iran's minimum wage was raised by about 60% this year, but its dollar value fell from about $105 to $86 since late March.

The economic strain is exacerbated by the disruption of trade. Lawmaker Reza Sepahvand told ILNA, Iran's state news agency, that the blockade cut off gasoline imports and that daily gasoline production is at its limit at about 130 million liters, compared with consumption of 137 million liters. Strikes on bridges have disrupted overland transport, and alternative routes—including land corridors and the Caspian Sea—are under strain.

The United Arab Emirates, a key transit hub for Iran's imports, suspended all trade with Iran over renewed missile fire, according to New York Post. Mohammad Farzanegan, professor of Middle Eastern economics at Germany's University of Marburg, explained that" Iran depends heavily on the UAE, not because the UAE itself produces one-third of Iran's imports, but because it serves as a major gateway for Iran to access third-country goods and commercial infrastructure."

Strait of Hormuz Slipping Away

One of the regime's notable achievements in the war—its ability to effectively pressure the Strait of Hormuz—is also undercutting its economy. Nearly 200 vessels sailed through the waterway last week, a 400% spike in two weeks, according to data from the UK Maritime Trade Operations Center. Maritime analysts Kpler noted that traffic, aided by US Navy escorts, effectively means Iran has lost partial control of the strait.

While international tankers continue to move, Iran's own oil exports have dropped to near zero under the renewed American blockade. Satellite images show little to no activity at Iran's key Kharg Island oil hub, leaving the regime with few options to offset its ailing economy. Treasury Secretary Bessent is threatening more penalties to come, as part of what the New York Post terms Trump's"economic D-Day" measures.

Leadership Fractures and Public Discouragement

Iran's political leaders are openly questioning the cost of the war. Parliament Speaker Mohammad Bagher Ghalibaf said: "No matter how much military power we have, if our people are struggling and the country lacks financial circulation and economic growth, we will not achieve progress. As someone who has experienced war, I understand the true value of peace."

President Pezeshkian, in a speech Friday per state media, warned against undignified surrender: "The war must come to an end at some point. It is better that we demonstrate our strength and dignity today and tell the world that we have won and that we are ending the war." Meanwhile, the new national security chief, Mohsen Rezaei, issued a blunt threat to regional partners: "Any country that becomes involved in creating economic restrictions against us will be regarded by us as an enemy." (Details as carried by New York Post and Times of Israel.)

Managing the Thresh of Unrest

Iran's rulers are increasingly wary of public anger. The Times of Israel reports that authorities have faced unrest risks, pointing to consecutive years, including a return of protests in January, but WITH limited numbers; those protests were crushed by the Islamic Revolutionary Guard Corps (IRGC) and the Basij force, with thousands killed, likely according to rights groups.

In recent months, authorities responded to any signs of dissent with an expanding crackdown, including executions, arrests, summonses, and lengthy prison sentences against a broad range of critics—journalists, lawyers, activists, human rights advocates, and students, as rights groups affirm. The appointment last week of Hossein Taeb, a past architect of crackdowns, to lead the Basij militia, signals the readiness of the state to suppress a new wave of protests (Times of Israel).

The Road Ahead

For ordinary Iranians, the hardship is tangible. One civil engineer, who spent a decade in the construction industry before it was ground to a halt by war, now struggles to find work. Speaking to Reuters on condition of anonymity, he described the constant worry: "I'm worried. If Trump imposes more sanctions, how will ordinary people survive? I don't want my country to be punished militarily or economically."

Iran's leaders face a destabilizing combination: renewed US economic attack, the loss of its trade corridors, and political calls from within to end a conflict that no longer shows an obvious path to victory. In this environment, the regime's stability may hinge on its ability to translate its military defiance into economic relief—or find a way out. As Pezeshkian acknowledges, "the economic reality is not a political slogan."