Iran's rial hits record low as oil exports collapse under US blockade

Iran's currency has fallen to a new record low as a US naval blockade has cut the country's oil exports to virtually zero, leaving the government facing a severe cash crunch and raising fears of renewed unrest. The rial hit more than 2.5 million to the US dollar among traders in Tehran, according to market data, less than a month after it set its previous record low of 2.2 million on Sept. 2.

The decline has been steep and rapid. The currency traded near 1.5 million rials to the dollar at the start of this year and around 920,000 in August 2025, meaning it has lost roughly 170% of its value in that period. Going back further, the rial began 2018 at 35,000 to the dollar.

The immediate cause is the collapse of Iran's oil trade. The US naval blockade has sent exports to virtually zero, and Iran did not load any oil last month at its export terminals — the first time that has happened since the 1979 Islamic revolution, according to Homayoun Falakshahi, head of crude oil analysis at Kpler. Iran's Persian Gulf neighbors have meanwhile boosted their own shipments under US military protection, eroding Tehran's control over the Strait of Hormuz.

Tehran is still generating a trickle of revenue from oil that was already aboard tankers at sea before the US reimposed its blockade in mid-July. Kpler estimated those supplies at 90 million barrels and expects them to run out by the middle of this month. Payments for those final deliveries, which primarily go to China, could stretch out to December. Once that flow ends, the government will lose what was once its top source of hard currency. Oil sales typically account for about a third of Iran's state budget and are also a key source of funding for the Islamic Revolutionary Guard Corps.

The economic damage extends well beyond oil. Iran cannot import goods by sea, including fuel, and land-based routes are clogged. Inflation is now near 90%, GDP is expected to shrink 5.4% this year, unemployment has jumped, and energy is being rationed. Even Supreme Leader Ayatollah Mojtaba Khamenei has expressed concern about «social cohesion» amid the hardship.

A prior currency collapse late last year triggered widespread protests that the government put down with a brutal crackdown early this year. Since the US and Israel launched the war on Iran in February, the rial has plunged further, stirring worries that unrest could return.

Washington has tightened the pressure in other ways. Last month the US expanded sanctions on Iran, making it harder for Tehran to move money through front companies and other intermediaries. In an interview with Fox News last week, Iranian President Masoud Pezeshkian complained that the government's money in China is blocked. «We can't even get our own money out of a country to which we've supplied goods, let alone using those funds to pay someone else in another corner of the world,» he said.

President Donald Trump has signaled he will let the economic campaign play out and has rejected Tehran's attempts to restart negotiations. Secretary of State Marco Rubio told Fox News on Monday that Iran was heading toward an economic «cataclysm.» «When you're denying them money through oil sales and sanctions, you're not just punishing them,» Rubio said. «You are preventing them from getting access to money that they will use to try and kill Americans and others around the world and their own people and build weapons and threaten the world and ultimately break out to a nuclear weapon program.»

The combination of a collapsing currency, near-zero oil revenue, and blocked access to funds held abroad leaves Tehran with few obvious options. With the last tanker-borne oil payments due to wind down by December, the pressure on the rial and on the government's finances is likely to intensify in the months ahead.

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Connor Quincy

Technology Reporter

Connor Quincy covers public affairs, politics, business, culture and daily news for Core Memo. The role focuses on verification, context, and clear explanations for readers.

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