U.S. blockade, sanctions crippling Iran's economy, Treasury report says
Add Axios as your preferred source to
see more of our stories on Google.
Treasury Secretary Scott Bessent speaks at an Aug. 24 press conference announcing a "D-Day" of new sanctions against Iran. Photo: Mehmet Eser/Anadolu via Getty Images
The U.S. naval blockade, sweeping economic sanctions and obstruction of overland export routes have crippled Iran's economy and intensified pressure on the regime, according to a new Treasury Department report obtained by Axios.
Why it matters: Treasury Secretary Scott Bessent, who is leading an economic pressure campaign dubbed "Operation Economic Outcast," is one of Trump's closest aides urging him to let the initiative play out rather than rush back into combat.
- Though the report doesn't argue that the Iranian regime is close to collapsing, it does lay out the Treasury Department's view that its efforts have crippled Iran's economy and limited its ability to generate revenue.
Driving the news: As he did before Operation Midnight Hammer in June 2025 and Operation Epic Fury in February, Trump is pursuing dual tracks — trying to reach a deal to restart peace talks while also preparing to possibly resume major combat operations after the midterms.
- The Treasury campaign, which launched in late August, is a third track. But U.S. officials say it needs more time to destabilize the regime and potentially convince the Iranian leadership to make concessions at the negotiations table.
- On Thursday, Trump met with his top national security and foreign policy aides to discuss the war.
- U.S. Central Command chief Adm. Brad Cooper, who commands forces in the Middle East, briefed Trump on the ongoing naval blockade. Bessent discussed the economic pressure campaign.
- "Bessent is telling the President the economic pressure campaign is working and that things are getting worse in Iran and that this could further destabilize the regime and push the Supreme Leader to agree to a deal," a U.S. official said.
Zoom in: The Treasury report highlights several indicators of Iran's economic crisis:
- Currency collapse: The Iranian rial has lost roughly a quarter of its value since the operation began in August. In October, the unofficial exchange rate reached a record low of 2.687 million rials to the dollar.
- "The currency's decline reflects mounting pressure on Iran's economy and financial system, eroding purchasing power and making it increasingly costly for the regime to access goods and services abroad," the report argues.
- Soaring inflation: Iran's annual inflation rate reached 90% in September, compared to roughly 35% in early 2025.
- Oil exports: Iran has not loaded any oil onto tankers since Aug. 25 because of the blockade and sanctions, the report says. Tehran has also sold off its remaining oil stranded at sea, according to Kpler, which tracks maritime trade.
Between the lines: The report details how the U.S. is seeking to cut Iran off not only from oil revenue but also from international trade routes, commercial aviation, banking networks and even digital currency alternatives.
- It states that Iran's effort to reroute trade overland around the U.S. naval blockade is facing major bottlenecks at borders with Pakistan, Turkey, Afghanistan, and Turkmenistan.
- Thousands of trucks are reportedly stranded at the Turkish border, facing delays of up to 20 days, while hundreds more are waiting at the Pakistani border, the report says.
- The UAE, Oman, Iraq, Georgia and Azerbaijan have barred Iranian airlines and canceled flights to Iran. Turkey has suspended all Mahan Air flights.
- Iranian banks have faced additional restrictions in Turkey, Lebanon and the UAE, while Treasury is targeting cryptocurrency exchanges used to evade sanctions.
