The blockade of the Strait of Hormuz has now become one of the most decisive variables in Iran’s political economy.
The blockade of the Strait of Hormuz has occurred under conditions where Iran’s economy was already suffering from deep structural dysfunctions. This structure is heavily dependent on maritime routes, through which more than 80% of its foreign trade is conducted. Under such conditions, any disruption to this route amounts to a direct blow to the backbone of the economy.
The blockade of the Strait of Hormuz effectively targets exports of oil, petrochemicals, and other energy-based products. This quickly reflects in the balance of payments and exacerbates the budget deficit. As a result, rising inflation and a surge in exchange rates will be inevitable consequences for this situation.
Strait Of Hormuz Declared Open Again; Trump: Naval Blockade Against Iran’s Regime Will Continue
However, the crisis is not limited to exports. Imports are also at serious risk. Iran’s economy depends annually on tens of millions of tons of imports of essential goods, medicine, and production inputs. The blockade of the Strait of Hormuz disrupts this chain, and particularly with the removal of the United Arab Emirates’ role as a regional trade hub, the supply network collapses.
The key point is that alternative routes, such as land transportation or northern corridors, lack sufficient capacity. These routes are not only limited but also far more costly. Therefore, even if imports continue, the final cost of goods will rise sharply.
In fact, the blockade of the Strait of Hormuz is not a temporary shock but a “structural shock”; one that irreversibly alters Iran’s foreign trade patterns and pushes the economy into a phase of gradual collapse.
The blockade of the Strait of Hormuz and the transmission of the crisis to people’s livelihoods
A significant portion of Iran’s imports is allocated to essential goods, from grains and rice to cooking oil and livestock feed. Disruption in this sector directly leads to rising food prices and reduced access to necessities for the population.
Even if famine does not occur, shifting import routes to land corridors multiplies costs several times over. This increase is directly passed on to consumers and reduces living standards. At a time when inflation has already reached unprecedented levels, this pressure can further erode purchasing power.
Alongside this, production enterprises also face a crisis. The dependence of industries on imported machinery and components means that trade disruptions lead to production stoppages. The result of this trend is rising unemployment and expanding poverty.
Available statistics show that even before the escalation of conflict, hundreds of thousands of jobs were lost and millions were at risk of unemployment. The blockade of the Strait of Hormuz accelerates this trend and can trigger a wave of widespread joblessness.
Under such conditions, the support structure is also incapable. The unemployment insurance system is limited and unable to cover millions of newly unemployed individuals. As a result, the economic crisis quickly turns into a social crisis.
Geopolitical deadlock and the inability of allies
One of the key questions under these circumstances is the role of powers such as China and Russia. However, the reality is that these countries also face serious limitations.
China, as an energy-intensive economy, is harmed by rising energy prices. Although it may continue trade with Iran, this trade will be conducted at much higher costs. As a result, it not only fails to help resolve the crisis but itself becomes a factor in increasing costs.
Russia is in a similar position. Its dependence on limited markets and the challenges arising from sanctions have reduced its ability to effectively support Iran. Any potential cooperation is largely confined to areas such as food supplies, which cannot replace extensive maritime trade.
The blockade as a consequence of a flawed structure
A final analysis of the blockade of the Strait of Hormuz would be incomplete without considering the structural roots of Iran’s economy. Iran’s economic problems are not merely the result of war or blockade but are rooted in institutional structures that have developed over decades.
The weakening of private property rights, the expansion of rent-seeking institutions, and the elimination of independent economic actors are among the factors that have made the economy vulnerable. In such a structure, any external shock quickly turns into an internal crisis.
The blockade of the Strait of Hormuz has, in fact, exposed these structural weaknesses. An economy heavily dependent on oil revenues and limited trade routes lacks resilience against such shocks.
Ultimately, it is Iranian society that pays the highest price. A population already under economic pressure now faces an even deeper crisis.
