A market in Tehran, the Iranian capital. [TASS]
A market in Tehran, the Iranian capital. [TASS]

Iran's economy is being pushed to the brink as US strikes on its power grid compound an oil export blockade that is deepening the country's crisis.

The United States has tightened its grip on Iran through a blockade of the Strait of Hormuz and a ban on Iranian crude exports, squeezing the country back to conditions that in effect predate any ceasefire MOU, according to the Wall Street Journal, Reuters and other outlets.

The Wall Street Journal said Washington expects the blockade to force a surrender, but that Iran's government is more likely to compel its citizens to endure the hardship.

Some analysts projected that the four-to-five-month blockade would reduce Iran's oil export revenues to near zero.

The Wall Street Journal said Iran has stockpiled about 100 million barrels outside the blockade zone, but that if the blockade continues, the country will be forced to halt production once its own storage capacity is full. Once crude exports stop, foreign currency inflows dry up, sending the prices of imported food, components and medicine soaring.

A scene in Tehran, the Iranian capital. [TASS]
A scene in Tehran, the Iranian capital. [TASS]

The IMF had already projected Iran's GDP would shrink 5.4 percent even before the latest escalation with the United States. Consumer prices in Iran rose 88.6 percent in June compared with the same period last year.

According to Britain's Daily Telegraph, US strikes over the course of a week primarily targeted military facilities threatening the Strait of Hormuz but also damaged more than 2,000 points on Iran's state-run power grid. Blackouts occurred within hours of President Donald Trump warning he would cut Iran's electricity to pressure it back to the negotiating table — a timing analysts said was no coincidence.

Mohammad Aladad, head of Iran's state power company Tavanir, said recent airstrikes caused approximately $1 billion in damage to the power grid, according to local outlet IranWire.

Iran, however, holds its own cards. Reuters, citing three sources, reported that Iran has instructed Yemen's Houthi rebels to blockade Red Sea trade routes if Iranian civilian infrastructure comes under attack.

The Houthis have already deployed drones and missiles near the Bab el-Mandeb Strait and are awaiting orders, sources said. An attack on the roughly 32-kilometer-wide strait would disrupt a trade route that handles $1 trillion worth of goods annually.

The Red Sea, where Saudi Arabia has rerouted most of its crude trade following the Hormuz blockade, accounts for about 7 percent of the world's energy supply.


dbsdn1110@heraldcorp.com