The military conflict in the Gulf of Hormuz and the tightening of American sanctions led to devastating results for Iran. Iran's consumer inflation rose to around 90% year-on-year, well above the previous highs of around 50% seen in 2019-20 and 2022. Inflation was increasing before the conflict, but its rate of acceleration has increased sharply since its beginning. The Real's goal is in freefall. In the open market, the real weakened to almost 3 million to the US dollar. The weakening of the real increases the cost of imports, which directly affects inflation. Crude oil exports, Iran's main source of foreign exchange, dropped from about 1.8 million barrels a day to almost nothing. Iran has already experienced a similar episode, when exports dropped from more than 2.5 million barrels per day in 2018 to very low levels in 2021-2019 as part of sanctions, and only then gradually recovered. This time the fall is sharper and faster. A loss of oil revenue means fewer dollars flowing into the country, which leads to a devaluation of the Rial, which in turn leads to an increase in import prices and inflation.

The military conflict in the Gulf of Hormuz and the tightening of American sanctions led to devastating results for Iran. Iran's consumer inflation rose to around 90% year-on-year, well above the previous highs of around 50% seen in 2019-20 and 2022. Inflation was increasing before the conflict, but its rate of acceleration has increased sharply since its beginning. The Real's goal is in freefall. In the open market, the real weakened to almost 3 million to the US dollar. The weakening of the real increases the cost of imports, which directly affects inflation. Crude oil exports, Iran's main source of foreign exchange, dropped from about 1.8 million barrels a day to almost nothing. Iran has already experienced a similar episode, when exports dropped from more than 2.5 million barrels per day in 2018 to very low levels in 2021-2019 as part of sanctions, and only then gradually recovered. This time the fall is sharper and faster. A loss of oil revenue means fewer dollars flowing into the country, which leads to a devaluation of the Rial, which in turn leads to an increase in import prices and inflation.