Trump Sanctions and Blockade Cripple Iranian Economy and IRGC

President Donald Trump initiated military action against Iran on February 28, 2026, triggering a global oil supply shock and a temporary cessation of traffic through the Strait of Hormuz. While the United States Navy later improved its ability to evade Iranian attacks to allow crude exports to rebound, the U.S. reinstated a maritime blockade in July that has prevented Iran from moving crude through the strait.

This military pressure coincides with a broad financial campaign led by the United States Department of the Treasury. By sanctioning Chinese refineries and cutting off banks in the UAE, the U.S. has collapsed Iranian oil exports from 1.7 million to approximately 260,000 barrels per day over the past year. These measures have pushed Iranian inflation toward 70% and youth unemployment to 20.1%, while draining the financial networks of the Islamic Revolutionary Guard Corps.

Regional dynamics have shifted as a result of the conflict. Saudi Arabia has sought increased U.S. protection for shipping lanes in the Red Sea and the Strait of Hormuz, while ending its participation in the China-backed mBridge digital payments project. The United Arab Emirates further reduced Iranian leverage by leaving OPEC on May 1 to increase crude output. Amidst this decline, Turkish authorities in Istanbul seized a Caspian Airlines Boeing 737 over an alleged unpaid debt of 3 million euros.