Iran's clock is ticking: Revenues are collapsing – and the hardest blow is yet to come

The naval blockade imposed by the United States on Iran is beginning to hit one of the regime's main vulnerabilities. According to a report published on Tuesday in the New York Post, Iran's oil exports have plummeted to near zero, and recent satellite imagery indicates little to no activity around the main oil terminal on Kharg Island. Miad Malki, a former senior official at the U.S. Treasury Department, estimates that if the situation continues, Tehran could struggle to meet payments to security forces and the elites upon which the regime relies within two to three months.

The struggle between the United States and Iran is largely shifting to the economic arena: Washington is trying to choke off Tehran's sources of income, while the Iranian regime is betting that it can hold out long enough until the economic cost of the war weighs on the Americans as well. However, according to the analysis published, the American blockade is already damaging Iran's most important source of income – oil.

Recent satellite imagery indicates a drop in tanker activity around the oil terminal on Kharg Island, one of the main hubs through which Iran exports its oil. According to the report, Tehran's ability to export oil through the Strait of Hormuz has been significantly impaired, and exports are now at a level close to zero.

Miad Malki, who served in the U.S. Treasury Department during the terms of Donald Trump and Joe Biden and currently works at the Foundation for Defense of Democracies, argues that the damage could turn from an economic crisis into a threat to the regime's stability within a few months. "The blockade has exposed Iran's greatest economic vulnerability," Malki said. According to him, "Iran's oil clock is ticking, and the real budget shock will come in the fall, when all their payments come due."

The problem for Tehran is not limited to a decline in state revenues. According to Malki, Iran pays salaries to soldiers, government employees, security forces, and industrial workers – and about 60% of the funds used for this come from oil exports. If the blockade continues to prevent oil exports in the next payment cycle as well, he argues, the options available to the regime to protect its people from economic damage will continue to shrink.

So far, the Iranian government has proven that it can cope with severe economic distress among its citizens. However, the assessment is that the situation may change if the lack of money reaches the circles upon which the regime relies – primarily the members of the Revolutionary Guards and the economic elite. According to Malki, once these groups also begin to feel the damage and complain about it, the internal pressure on the government could be significantly different from that caused by rising prices or a decline in the general public's standard of living.

The Trump administration, for its part, is signaling that it does not intend to ease the economic pressure. Trump has already claimed in the past that Iran is struggling to obtain the money needed to pay its forces. U.S. Treasury Secretary Scott Bessent also made it clear that further steps are on the way. As part of what is called "Operation Economic Fury," the United States has already taken steps against money changers, activity in the digital currency sector, and other sources of income for Iran. Bessent declared that the goal is to bring Iran to "economic isolation like the world has never seen."

The American strategy, therefore, is not limited to blocking oil exports. The goal is to simultaneously reduce other channels through which Tehran can bring money into the country and bypass the pressure exerted on it.

Iran, for its part, believes it can still win the war of economic attrition. In Tehran, they estimate that the war and the situation in the Strait of Hormuz are also taking a toll on the United States and increasing political pressure on Trump. Oil prices have remained high following the closure of the Strait of Hormuz. According to the data presented in the report, the price of a barrel of Brent crude reached about $90 on Monday, while the average price of a gallon of gasoline in the United States has remained above four dollars in recent weeks.

As mentioned, oil exports are one of Iran's most important sources of income and provide the regime with the foreign currency needed to fund the state's activities and mechanisms. For this reason, blocking the ability to sell and transport oil is not just a blow to a specific economic sector – it could directly affect the government's ability to fund its activities. The U.S. naval blockade is intended to exacerbate exactly this pressure. At the same time, the U.S. Treasury Department is acting against sources of income and alternative ways of transferring funds, with the aim of reducing Tehran's ability to bypass the restrictions.

The central point now is the duration. According to the assessment presented in the report, the significant test may come in the fall, when Iran will be required to make another round of payments while its oil revenues are shrinking. If the assessment materializes, the economic pressure may penetrate from the general public into the heart of the Islamic Republic's power mechanisms. However, at this stage, this is Malki's assessment and not a determination that the regime will indeed collapse or be destabilized within this timeframe.