Can Tehran survive a ‘zero oil’ budget, if US blockade on Iran persists?

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The government is defiant and planning for the worst, but a US siege is expected to make most Iranians poorer.

Tehran, Iran – After months of oscillating between new bouts of fighting and negotiations, the administration of United States President Donald Trump has reportedly opted for a third option – gradual economic pressure on Tehran.

US Secretary of State Marco Rubio told his Group of Seven (G7) counterparts in Paris on Tuesday that a naval blockade, stringent sanctions and overland border disruptions could continue without a clear endpoint in sight, according to US media. He later said that Iran’s economy “continues to collapse” and predicted worsening conditions over the next one to three months.

Tehran-based economist and market analyst Isaac Saidian said that if the persistent economic siege on Iran brings the country’s oil incomes down to near-zero levels, Tehran will be faced with one of the most difficult challenges in its recent history.

“The issue is not just a decline in foreign currency incomes, but the government’s ability to account for current expenditure, paying salaries and pensions, providing essential goods, preserving the value of the national currency, and preventing budget deficits from turning into a new inflationary wave,” Saidian told Al Jazeera.

Iran’s President Masoud Pezeshkian has indicated that the cash-strapped civilian government is preparing to deal with a prolonged economic crisis caused by siege and sanctions, but has admitted that the lingering “no war, no peace” conditions will be harmful.

But the authorities have stressed that there are no prospects of economic collapse. They have also raised the prospect of “breaking the blockade” if necessary, although it remains unclear by what means.

In a budget directive on November 3, Pezeshkian’s administration set out two scenarios. One was the continuation of sanctions, the maritime blockade and present regional conditions. The other prediction was an improvement of the situation involving fewer financial and commercial restrictions, including a substantial or complete removal of the blockade.

“The…

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