Iran has proposed ending its restrictions on the Strait of Hormuz, a critical global energy chokepoint, if the United States lifts its economic blockade and ceases ongoing hostilities, two regional officials confirmed Tuesday. This offer emerges as U.S. and Israeli strikes have crippled Iran's industrial base, costing at least 1 million direct jobs and pushing millions more towards unemployment. "Never have I heard my father so upset," said the son of a prominent rugmaker in Kashan, describing the economic despair gripping his family's business.
The economic devastation inside Iran has reached a critical point, extending far beyond the immediate battlefields. In the central Iranian city of Kashan, a historic hub for carpet weaving, roughly 80% of manufacturers have ceased operations in the industrial zone, according to the son of a local rugmaker. His own family's factory, which once produced hundreds of machine-made rugs monthly with a staff of 20 to 30 people, now stands silent.
This direct impact on the working families of Iran illustrates the severity of the economic squeeze. Over more than five weeks of intense bombardment, U.S. and Israeli forces have struck thousands of factories across Iran. AP News reported these strikes have reverberated through the nation's economy, leading to a surge in layoffs and spiraling consumer prices.
The cost of essential goods has jumped dramatically; chicken prices rose 75% last month, while beef and lamb increased 68%. Many dairy products now cost half again as much as they did just weeks ago. What this actually means for your family is that every trip to the market becomes a struggle, stretching already thin budgets to their breaking point.
Deputy Labor Minister Gholamhossein Mohammadi stated, according to state media, that Iran has directly lost at least 1 million jobs due to the conflict. The ripple effects, however, are far more extensive. Hadi Kahalzadeh, an Iranian economist and research fellow at Brandeis University, warns that between 10 million and 12 million jobs are now at risk.
This represents half of Iran's entire labor force. These are not abstract numbers; they are breadwinners, families, and communities facing an uncertain future. Israel maintained its strikes targeted the industrial infrastructure of Iran's paramilitary Revolutionary Guard, AP News reported.
However, the damage has spread widely, hitting facilities not owned by the military force. Kahalzadeh estimated that airstrikes damaged 20,000 factories, representing approximately 20% of Iran’s total production units. Among the damaged sites was Tofigh Daru, Iran's largest pharmaceutical holding, which produces anticancer medications and other vital drugs.
Optics and chemical developers, along with aluminum and cement factories, also sustained hits. Perhaps the most significant blow came just before the April 8 ceasefire, when a wave of strikes targeted Iran’s largest steelmaking and petrochemical factories. The two biggest steel producers, Mobarakeh Steel and Khuzestan Steel, along with smaller mills, have completely halted production.
More than 50 petrochemical complexes have also shut down, according to Iran’s semiofficial Jamaran news agency. This has crippled Iran’s two largest non-oil export sectors. The downstream effects are considerable.
Higher prices now affect a wide array of products, from plastics and pipes to fabrics and the packaging used for everyday groceries like milk, butter, and cheese. These strikes are not the only factor contributing to Iran’s economic distress. The internet has largely remained shut down since mass protests in January, severely damaging small and medium-sized businesses that rely on online sales and digital commerce.
Furthermore, even before the U.S. blockade, Iranian strikes on the United Arab Emirates, a country that supplied roughly a third of Iran's imports, led to a disruption in trade between the two nations. The policy says one thing – target military industrial complexes. The reality says another – the entire economy suffers.
Mehdi Bostanchi, who owns a ventilation and air conditioning factory and another producing household fans, currently maintains operations for his more than 1,130 employees. Yet, his HVAC factory heavily depends on the construction industry, which, he explained, "is facing a massive shock." Most new building projects have been paused, and the price of iron sheeting, a fundamental material, has more than doubled. Bostanchi, who is also a member of a council representing Iranian industrialists, emphasized, "all the country’s industries in some way rely on our petrochemical industry." Even businesses without direct ties to steel or petrochemicals find themselves affected through their contractual partners.
A chemical engineer working for one of Iran’s largest private construction contractors described the immediate fallout. His company laid off half of its 180 headquarters staff and had to cancel a project with Mobarakeh Steel, resulting in the loss of 1,000 jobs. Another Tehran resident, who quit a consulting engineering job just before the war, now faces uncertainty about a new position he had secured. "I am at the top 1% (of society), and I am without a job.
I am super worried about my future," he shared, expressing concern that people’s savings will deplete in the coming weeks. Both the chemical engineer and the Tehran resident spoke on condition of anonymity due to security concerns, highlighting the climate of fear. The current economic hardship echoes the conditions that fueled widespread protests in January, AP News reported.
Those demonstrations began over worsening inflation but quickly evolved into calls for an end to the Islamic Republic, leading to a bloody crackdown. Iranian officials are now attempting to reassure the public that the nation can endure the economic pain. The government has pledged to increase unemployment insurance benefits.
However, the burden on Iran’s social security system is growing even as its funding sources are diminished, Kahalzadeh noted. The system relies heavily on its investments in petrochemical companies and other key industries, precisely the sectors that have been most severely hit. blockade compounds these issues by threatening to cut off vital export revenues. In 2025, Iran sold approximately $98 billion in exports, with just under half of that revenue coming from oil.
A complete blockade, however, presents challenges for the United States. Esfandyar Batmanghelidj, an economic expert and head of the Bourse and Bazaar Foundation, a research group focusing on economic development in West and Central Asia, points out that roughly half of Iran’s non-oil trade occurs overland or through Caspian Sea ports. These routes are harder to interdict.
Iran has also cultivated significant economic resilience and "readiness for worst-case scenarios," Batmanghelidj wrote for the Bourse and Bazaar Foundation. The country maintains substantial reserves of crucial supplies. By the end of 2025, Iran had stored enough electrical machinery to last nearly eight months, sufficient cement for almost six months, and enough steel and iron to cover four months of demand, he detailed.
These supplies could be further extended through rationing measures, suggesting a capacity to withstand prolonged pressure. Why It Matters: The standoff in the Strait of Hormuz carries global implications for energy security and prices. This narrow waterway, through which a fifth of all traded oil and natural gas passes, is a critical artery for the world economy.
Iran's offer to re-open the strait in exchange for an end to the U.S. blockade and the war highlights the immense leverage Tehran believes it holds. For ordinary families worldwide, a prolonged closure or disruption could mean higher fuel costs and increased inflation, impacting everything from daily commutes to the price of consumer goods. For Iranian families, the situation means continued job losses, soaring prices, and a deepening humanitarian crisis.
Both sides claim victory in this economic struggle. Here are the numbers: millions of jobs lost in Iran, billions in global trade at risk. Bostanchi, the factory owner, believes Iran’s economy could rebound once the conflict ends.
The speed of that recovery, however, hinges on whether Iran can secure an end to international sanctions. "If we cannot lift the sanctions in any agreements, then no, the optimistic forecast… will not happen," he stated. The coming weeks will reveal if the current diplomatic overtures gain traction. Observers will watch for any signs of de-escalation from either Washington or Tehran, and whether global powers can broker a deal that addresses both Iran’s economic suffering and the world’s energy concerns.
The humanitarian situation inside Iran, particularly the rising unemployment and food prices, will remain a key indicator of the pressure on the Iranian government to find a resolution. Key Takeaways: - Iran offers to lift Strait of Hormuz restrictions if the U.S. ends its blockade and the war. - U.S.-Israeli strikes and blockades have devastated Iran's economy, causing at least 1 million direct job losses and risking 10-12 million more. - Critical industries like steel, petrochemicals, and carpet manufacturing have largely halted production, driving up prices for essential goods. - Iran's leverage over the Strait of Hormuz is a direct response to severe economic pressure, impacting global energy markets. What comes next: Diplomatic efforts will intensify to bridge the gap between Iran's demands and U.S. conditions.
The stability of global energy markets will depend on the duration of the Strait of Hormuz restrictions. Domestically, observers will monitor for any resurgence of anti-government protests in Iran, especially as economic hardship deepens and social security funds strain. The capacity of Iran's stored reserves will also be a critical factor in determining how long the country can sustain its current economic isolation.
Key Takeaways
— - Iran offers to lift Strait of Hormuz restrictions if the U.S. ends its blockade and the war.
— - U.S.-Israeli strikes and blockades have devastated Iran's economy, causing at least 1 million direct job losses and risking 10-12 million more.
— - Critical industries like steel, petrochemicals, and carpet manufacturing have largely halted production, driving up prices for essential goods.
— - Iran's leverage over the Strait of Hormuz is a direct response to severe economic pressure, impacting global energy markets.
Source: AP
