US Treasury Secretary Scott Bessent, in an interview with Iran International, warned Iranians to stock up on gasoline and heating fuel ahead of expected shortages, predicting the economy would shrink by more than a quarter in the year ending March 2027.
Bessent said Iran was running short of foreign currency, oil production was beginning to falter and the next eight weeks of Washington's Operation Economic Outcast would be “even more intense.”
“I would predict that from March of '26 until March of '27, the economy would contract more than 25 percent, which is more than the Soviet Union contracted after its collapse,” Bessent told Iran International’s Kambiz Tavana on Monday.
The Treasury secretary said the campaign was intended to pressure Iran's leadership rather than its population, while warning of severe fuel shortages this winter.
“My advice to the Iranian people would be: don't pay your taxes because you're not going to get anything back from the government,” Bessent said.
“You should start stocking up on heating fuel. There's going to be a big heating fuel shortage. In terms of gasoline, everyone should fill up their tanks now.”
Asked about the impact on ordinary Iranians, Bessent said humanitarian channels remained open for food and medicine, but the government was running out of dollars to pay for imports.
He also said authorities were printing money, failing to pay salaries and would continue cutting social benefits.
Bessent said economic pressure was exposing disagreements among Iranian politicians, the Revolutionary Guards and the supreme leader. He described some IRGC commanders as isolated from the public and unaware of the extent of the economic deterioration.
‘More intense’ pressure ahead
Iran's economy has come under mounting pressure from two rounds of war with the United States and Israel, a US naval blockade that has sharply curtailed its oil exports and an expanding sanctions campaign targeting its remaining sources of foreign currency.
“Iran, for the first time, probably since oil was discovered, has no oil on the water,” Bessent said. “There have been no loadings at Kharg Island. Production is starting to falter.”
“We've been going for eight weeks, and I can tell you the next eight weeks is going to get even more intense,” he said.
Bessent said Washington remained prepared to negotiate, but insisted Iran could not have a nuclear weapon and must stop financing regional armed groups.
Diplomatic efforts have intensified in recent days, with Qatari mediators in Tehran on Sunday followed on Monday by senior officials from Saudi Arabia, Pakistan and Turkey seeking to de-escalate tensions and revive negotiations.
Tehran, however, has shown little sign of softening its core demands under mounting economic pressure. Iranian officials insist Washington must meet its conditions, including lifting the naval blockade.
Targeting Iran's middlemen
Bessent also appealed directly to people involved in moving Iranian government money overseas, saying some financial intermediaries were already refusing to return funds to Tehran.
Iranian officials commonly refer to such intermediaries as “trustees,” who handle oil revenues and other transactions outside the formal banking system to circumvent sanctions.
“We are seeing the regime go bankrupt,” Bessent said. “So many of the people who are holding money outside of Iran do not want to send it back in.”
He said Iranians inside the country, members of the diaspora and employees of embassies and consulates could provide information to Treasury under its whistleblower program, with rewards of up to 30% of recovered funds.
“We are happy to unsanction individuals who work with us,” he said, adding that cooperating intermediaries could potentially claim 30% of funds they were holding for Tehran.
Bessent said Treasury was also tracking Iran's attempts to move money through cryptocurrency and foreign banks.
“There are numerous banks… We shut the Dubai branches of an Egyptian bank. We closed a Turkish bank, the second-largest Russian bank, VTB. We discovered that their external branches outside of Russia were aiding the regime,” he said.
‘Nothing like this’
Bessent rejected suggestions that Iran could wait for the US midterm elections in the hope that Washington's approach would change.
“Nothing will change in terms of President Trump's calculus, in terms of how resolute we are here at Treasury, in terms of the blockade,” he said.
Asked whether the combination of sanctions and a naval blockade had any historical precedent, Bessent said the closest comparison was Washington's campaign against Venezuela, but argued that the measures imposed on Iran went substantially further.
“There's been nothing like this,” he said.
Two retired employees of Iran's national airline died after being forced to abandon medical treatment they could not afford, the semi-official ILNA news agency reported on Monday, citing the head of the airline's retirees' association.
Jalal Hashemi, chairman of the Iran Air Retirees Association, said the deaths occurred over the past two to three weeks amid worsening financial and healthcare problems affecting around 13,000 retirees and pensioners of the airline, also known as Homa.
"The situation has become so catastrophic that in just the past two or three weeks, two of our retired colleagues were forced to abandon treatment because they could not afford hospital expenses, and unfortunately lost their lives," Hashemi told ILNA.
Iranian households face mounting economic hardship after years of inflation, sanctions and economic mismanagement, compounded by two rounds of war with the United States and Israel.
Iran Air retirees have staged repeated protests over pension payments, healthcare coverage and the management of their retirement fund.
In August, retirees gathered outside the airline's headquarters in Tehran to demand improvements to healthcare services and the reinstatement of suspended welfare payments.
Hashemi said Iran Air had paid only two of 12 installments owed to Iran Insurance Company under its insurance contract for the Iranian year ending in March 2026, prompting the insurer to suspend inpatient hospital coverage for retirees.
According to Hashemi, Iran Air retirees receive an average monthly pension of around 270 million rials (about $100), while approximately 5,600 receive minimum pensions of just over 180 million rials (about $66).
He estimated the shortfall in the airline's healthcare insurance fund at 4 trillion rials (about $1.5 million), saying no institution had accepted responsibility for covering the deficit.
Recent reductions in government-subsidized foreign currency for medicine imports, drug price increases and rising out-of-pocket healthcare costs have further strained the fund.
Hashemi also said Iran Air management had suspended a monthly welfare allowance of 60 million rials (about $22), citing financial losses from the war and reduced flights.
Flour shortages have forced bakeries to close in several Iranian cities and pushed up bread prices, with residents and bakers reporting disrupted supplies, falling purchasing power and growing uncertainty over their businesses.
Residents in Tabriz, Karaj, Kerman and Hamedan told Iran International that interruptions and delays in flour deliveries had disrupted independent bakeries and producers of various types of bread.
Several bakeries on a street in Tabriz have shut down, a resident said.
“I asked why, and they told me they weren't receiving flour. They keep promising that the flour quotas will be replenished today or tomorrow, but nothing happens.”
Previous reports have also documented flour shortages and bakery closures, with residents describing bread shortages and interruptions to production caused by electricity outages.
Flour supply disruptions shut bakeries and sandwich shops
Independent bakers have reported that difficulties obtaining flour have forced businesses to suspend operations.
A citizen of Hamedan in western Iran said flour shortages and rising prices had affected not only bakeries producing specialty bread but also sandwich shops.
Flour prices have risen, and suppliers are now saying there is no flour available at all, the resident said.
“Our bakery is closed because we have no flour, and nobody is taking responsibility,” a independent baker told Iran International.
The shortages have coincided with declining purchasing power, leaving bakeries struggling to secure supplies as customers struggle to afford bread.
“They don't have flour to give us, and I swear to God, people don't have money to buy bread either. Our economic situation has become critical,” another baker said.
Iran's flour distribution system distinguishes between subsidized bakeries and independent bakeries, which face different purchasing prices and supply arrangements.
Flour allocations to certain independent bakeries had been reduced, Bagher Khodadadi, head of supervision and inspection at the Khorasan Razavi provincial agriculture department, confirmed on October 21.
Khodadadi said the shortages in flour distribution had been addressed.
Bakeries reducing their operating hours because of flour shortages would be committing a violation and could face enforcement measures, he added.
Rising prices disrupt food retailers
The flour supply problems have also affected food retailers that depend on bakeries for their products, according to messages.
Two bakeries supplying bread to a supermarket in Kerman said they no longer had enough flour to continue production, the store's owner said.
“Two of the bakers who supply me called and said there was no flour left and they couldn't bake and deliver bread tomorrow. A famine has officially begun.”
A resident of Karaj also described a sharp increase in bread prices.
“I bought two baguettes and they cost 800,000 rials. The price of flour has also tripled.”
Iran International previously reported on October 8 that residents had described unannounced increases in bread prices and flour shortages in several areas.
Bread prices in Tehran province had risen by as much as 100% for certain varieties by June 23.
The increases have added to the financial pressure on households already struggling with declining purchasing power.
Uncertainty over flour quotas and pricing
The disruption has raised further questions about how flour quotas are allocated and priced for independent bakeries and producers of larger and semi-industrial bread varieties.
Flour allocations to these businesses were suspended about two weeks ago, according to another message received by Iran International.
The sender said suppliers had attributed the suspension to the government's failure to announce new flour prices, leaving bakeries uncertain about when deliveries would resume.
The resident also said certain flour mills were selling supplies on the black market without issuing invoices specifying prices.
Comments by provincial grain officials about flour allocations have added to questions over the distribution system and the availability of supplies.
Iranians say they are paying more for slow, unreliable and heavily restricted internet after mobile operators raised data prices by up to 40%, with some reporting that their allowances run out unusually quickly.
Messages sent to Iran International described mounting frustration over the cost of staying connected, from families worried about paying for online classes to users struggling to send even a text message.
“All we have left of life in Iran is passing the time on our phones, and they are taking that away too,” one reader from Baharestan said.
Mobile operators Hamrah-e Aval and Irancell increased their data package prices by up to 40% early on Friday, October 23, according to state media.
One reader said a weekly four-gigabyte package had risen from 330,000 rials ($0.12) to 450,000 rials ($0.17). Another said a monthly six-gigabyte package that cost 530,000 rials ($0.20) three days earlier now cost 740,000 rials ($0.28).
The pressure comes as Iran’s official minimum wage stands at about 166.3 million rials per month, equivalent to roughly $62 at the unofficial-market exchange rate.
Others questioned why prices were rising again after earlier increases before and during the war.
“Didn’t they raise internet prices two months before the 40-day war? Didn’t they raise package prices again during the war, taking advantage of the blackout?” one reader asked, referring to the US-led war that began on February 28. “So what is this latest increase for?”
The higher charges have brought no improvement in service, according to accounts from users across the country.
A reader in the northern province of Mazandaran described Hamrah-e Aval’s connection as moving “at a snail’s pace,” saying Wi-Fi connections in many areas also cut out, even when accessing domestic messaging apps.
In Iranshahr, in southeastern Iran, another reader reported severely degraded ADSL service followed by a complete outage from 8 p.m. on Friday. Another said sending a text message on Telegram was difficult, let alone a photograph or video.
Iran International reported on Friday that users in Semnan, Shiraz, Tabriz, Kerman, Tehran and Tonekabon had complained of sharply slower connections, malfunctioning tools used to bypass internet filtering and difficulty accessing social media.
The Telecommunications Company of Iran has previously attributed some disruptions to “upgrading and optimizing technical infrastructure.”
The complaints come against a backdrop of extensive restrictions on internet access. Freedom House’s 2026 report gave Iran an internet freedom score of nine out of 100, down from 13.
The organization said Iran’s tiered internet system had made access to the global internet difficult and expensive, leaving much of the population restricted to a domestic network controlled by the authorities.
All global social media platforms, from X and Telegram to Facebook, Instagram, TikTok and YouTube, are banned in Iran.
Several readers also accused operators of “stealing data,” saying their allowances were depleted far faster than their usage would explain.
“I topped up my data package two days ago. Today, only 600 megabytes of my six gigabytes are left, even though we don’t have a decent connection,” one reader said.
Another said a six-gigabyte package bought for 570,000 rials ($0.21) had run out within two days despite limited use, and now cost 730,000 rials ($0.27) to replace.
Cost of education
For families, the increases have also raised concerns about the cost of education if gas shortages force schools to move classes online.
One reader said a one-gigabyte Hamrah-e Aval package cost 330,000 rials ($0.12), including tax. “With things like this, how are we supposed to buy data for online classes?”
Another said repeated price increases had left them unable to afford internet access at all.
“We live in a country with vast oil and gas resources,” another reader said, “but we earn in rials and spend in dollars.”
Iran still has the knowhow, middlemen and shadow-fleet infrastructure it spent years developing to sell sanctioned oil to China. But it has now run out of oil outside Iran to put through that system.
The US naval blockade has exposed a limitation in Tehran’s sanctions-evasion machinery: ship-to-ship transfers, false paperwork and steep discounts can disguise and sell crude once it is at sea, but they cannot get fresh cargoes out of Iranian ports.
For months, Iran was able to keep selling oil to China because millions of barrels had already left the country on tankers and were sitting in Asian waters. That reserve is now effectively exhausted.
Kpler analysts cited by The Wall Street Journal on Wednesday estimated Iran had about 135 million barrels in overseas storage when the war began in February. By October 5, that had fallen below one million barrels.
Vortexa gave a different figure, estimating Iranian stocks off Singapore at roughly six million barrels on October 9. The difference reflects varying tracking methods and locations, but both show that the offshore stocks that sustained Iranian exports have been largely depleted.
The Malaysia route dries up
Malaysia sits at the heart of how Iranian oil has reached China, serving mainly as a transfer point rather than the true source of much of the crude.
The Wall Street Journal reported in May on ship-to-ship transfers of Iranian crude off the Malaysian coast.
A sharp drop in China’s purchases recorded as Malaysian crude could therefore provide another indication that the flow of Iranian oil through the system has dried up.
But the figures are not a one-for-one measure of Iranian exports. Chinese customs data record the declared origin of cargoes, while ship tracking can miss transfers or vessels operating without transponders.
The timing nevertheless coincides with the depletion of the offshore stocks that had fed the trade. If no new Iranian crude is available for transfer near Malaysia, fewer cargoes would be expected to appear in Chinese data under a Malaysian origin.
China turns to other suppliers
China remains Iran’s most important potential buyer, but its independent refineries are already lining up alternatives.
Reuters reported on October 6 that Chinese “teapot” refineries had purchased at least 12 million barrels of Iraqi and Qatari crude for delivery in October and November. Traders suggested the total could reach 15 million to 20 million barrels.
Iranian oil had been attractive largely because of its steep discount. Iraqi and Qatari cargoes may cost more, but they arrive through normal channels and carry less risk of sanctions trouble or sudden interruptions.
Iran could offer deeper discounts or rely more heavily on intermediaries to retain Chinese customers. Neither solves the central obstacle: the oil still has to be loaded and shipped.
Reuters reported in August that offers of Iranian oil to Chinese buyers had already fallen as stored cargoes were sold.
Few alternatives to tankers
Jask, on the Gulf of Oman, is often cited as Iran’s alternative export outlet. The Goreh–Jask pipeline and terminal were built so oil could reach the sea without passing through the Strait of Hormuz.
So far, however, the facility has not shown it can replace Iran’s main export system.
The International Energy Agency’s February 2026 factsheet described Jask as effectively out of regular service. S&P Global later reported tanker activity there between March and July, indicating occasional use.
That suggests the route can handle some cargoes, not that it can support exports on the scale Iran needs. A port outside Hormuz is also not necessarily beyond the reach of a blockade aimed at Iranian ports.
Rail and trucking through neighboring countries offer still less capacity. They face high costs, limited infrastructure, border procedures and sanctions risks.
The pressure shifts onshore
If crude cannot be exported, Iran’s problem moves from the sea back to its oil fields.
Tehran can send more crude to domestic refineries, use available storage or cut production. Kpler estimated earlier in the blockade that Iran had already begun reducing output as inventories rose and usable storage space tightened.
Usable storage is not the same as total tank capacity: some tanks hold condensate, and not all can simply be switched to crude.
Further production cuts would mean less revenue and could make restarting output more difficult. But continuing to pump oil with nowhere to send it risks filling remaining storage and eventually forcing deeper cuts.
The financial impact will also emerge gradually because payments for cargoes already delivered can arrive weeks later.
The United States says the blockade has denied Iran at least $25 billion in oil revenue, a CENTCOM estimate cited by the Journal rather than an independently verified measure of Tehran’s net losses.
Iran has not forgotten how to evade sanctions or lost the network it built to sell oil despite them. But before Tehran can disguise a cargo, transfer it between ships or sell it at a discount, it first has to get the oil out of Iran.
China's imports of oil recorded as Malaysian have plunged alongside the collapse of Iranian exports under the US naval blockade, suggesting how heavily Iran relied on relabeling its crude for its biggest customer.
In September, China imported just 276,000 barrels per day of oil recorded as Malaysian, down from an average of nearly 1.3 million barrels per day in 2025.
In some previous months, the figure had reached 2 million barrels per day. That is roughly four times Malaysia's total oil production.
Much of the discrepancy may reflect oil coming from Iran but recorded by China's customs as originating in Malaysia, alongside sanctioned oil from other producers and genuine Malaysian exports.
Chinese customs authorities have consistently reported zero monthly imports of Iranian oil since 2020. Yet tanker-tracking companies estimate that Iran delivered an average of around 1.5 million barrels per day to China last year.
Sanctions and blockade
Kpler previously told Iran International that most Iranian oil exports to China are recorded as Malaysian, while some cargoes are declared as originating from Iraq, Oman and even the United Arab Emirates. TankerTrackers has also documented the practice.
The decline in China's recorded Malaysian imports has accelerated as US sanctions have tightened and the naval blockade has choked off Iranian exports.
Kpler data obtained by Iran International show that Iran delivered more than 1.55 million barrels per day of oil to China between January and May this year. From June through September, the average fell to less than half that level.
By mid-October, the volume of Iranian oil afloat outside the US blockade line had fallen to zero.
If current trends persist, China's imports of oil recorded as Malaysian could fall to their lowest level in years, potentially approaching the 2017 level of just 130,000 barrels per day as early as this month or next.
Alternative suppliers
While Iranian oil exports have collapsed, tanker-tracking data show that overall oil exports from the Middle East have recovered to prewar levels and even surpassed them.
The Wall Street Journal, citing Kpler data, reported that the region's exports of oil and petroleum products have reached 24 million barrels per day, above the level recorded before the war.
Before the war, more than 80% of the oil passing through the Strait of Hormuz was destined for Asian markets, with China the largest buyer.
Chinese customs data show that in September, China imported an average of 2.9 million barrels per day from Oman, the United Arab Emirates, Qatar, Saudi Arabia and Iraq, up from less than 2 million barrels per day in May.
The figure nevertheless remained below February's prewar level, when China's combined imports from those five countries exceeded 3.8 million barrels per day.
The numbers also reflect a broader shift in Chinese oil buying after the outbreak of war. As global prices surged, China at one point cut overall crude imports by around 30% and drew instead on its strategic petroleum reserves.
In that sense, China acted as a significant shock absorber, helping limit an even sharper increase in global oil prices.
Before the war, China imported around 11.5 million barrels per day of crude. Following the US-Israeli war on Iran and disruption of traffic through the Strait of Hormuz, imports fell to around 8 million barrels per day before recovering more recently to above 9 million.
The shift suggests that China is increasingly replacing lost Iranian barrels with oil from other Middle Eastern producers. The disappearance of China's “Malaysian” imports is yet another measure of how sharply the blockade has curtailed Iran's access to its most important oil market.
