Iran’s oil output is at its lowest level in 23 years, the FT reports:
Iranian oil production has plunged to its lowest level for more than two decades because of the impact of US and European sanctions, the International Energy Agency has said in a report that highlights the growing economic pain of the sanctions.
Meanwhile, as Reuters reports,
Iran’s vital seaborne trade is buckling under the weight of Western sanctions, deepening hardship for a population deprived of basic imports and heaping intense pressure on Tehran over its nuclear program. [...]
A growing number of Western companies, especially those in shipping and related businesses, are pulling out of trade with Iran due to the complexities of deals and tougher banking restrictions as the sanctions take hold—and out of fear of losing business elsewhere.
Are sanctions truly responsible? The answer, it seems, is yes. Sanctions have weakened an already mismanaged Iranian economy and made it difficult for Iran to access the international financial system, as Mark Dubowitz, with the Washington-based Foundation for the Defense of Democracies, told Reuters:
You start to see Iran reaching a balance of payment crisis particularly on the imports side when a plummeting currency, which makes imports exceedingly expensive, is compounded by external sanctions … The combination of these factors is making it difficult for Iran to buy what it needs from abroad and pay for these goods and services.
But sanctions are probably not going to cause an economic or political crisis that, on its own, forces Iran’s revolutionary leadership to change course. Business and politics may become more difficult for Iran’s well-heeled and powerful, but they will comfortably weather the storm.
The more important question is how will the middle and lower classes react to a worsening economy? Ordinary Iranians trying to buy food and pay the bills are the ones most likely to feel the sanctions squeeze. Will they blame the mullahs? Or outsiders?