Two months and a day ago, the Memorandum of Understanding between the Iranian regime, what's left of it, and the United States was signed, promising a roadmap for further negotiations which would lead to a permanent peace agreement to end the 47-year the Islamic Republic has waged on the U.S. and Israel.
As for the terms of the M.O.U., which basically consisted of no longer impeding traffic in the Strait of Hormuz with drones, mines, missile attacks, or gunfire in return for lifting the blockade on Iranian ports, the agreement pretty much went by the wayside in two weeks after an attack on three commercial vessels traversing the Strait.
Within a few days of the withering U.S. response on targets all along Iran's southern coast, President Donald Trump signaled he was all but done seeking a deal with the regime. Yesterday, the White House made that official with the announcement that the expiration date of the M.O.U. would not be extended. It was followed up by this message from the President on social media.
— Rapid Response 47 (@RapidResponse47) August 18, 2026
The tourniquet being tightened on the Iranian economy appears to be Trump's strategy for the foreseeable future, along with retaliatory strikes ten times harder if the Iranians decide to pop off with whatever they figure out how to launch. There have been pot shots taken at ships, but oil is leaving the Strait mostly by pipeline, but also by tanker, and the blockade is still in place with no relief in sight for Iranians.
Thanks to the coordinated efforts of the U.S. military and our gulf allies, the seven-day average for oil leaving the Strait of Hormuz is currently up to almost 9 million barrels per day.
— Secretary Chris Wright (@SecretaryWright) August 11, 2026
When combined with the additional 5-7 million barrels per day leaving the region via newly…
Oil prices, north of $110 dollars a barrel at the height of kinetic warfare by the United States and Israelis against regime targets, touched the high-$60's before Iran decided to break the terms of the M.O.U. It has begun to creep back into the low-$90's, but not for the reason you would think. Supply is not a factor. Even though Donald Trump is apparently unwilling to begin a heavy military campaign to destroy Iranian dual-use infrastructure and/or target regime commanders in the IRGC and Basij forces, or perhaps Supreme Leader Mojtaba Khamenei, the speculation in the oil market is that the blockade, and its effect on the Iranian economy is so severe, the regime is desperate, out of wiggle room, and about to attack U.S. interests in an attempt to force Donald Trump back to the negotiating table. Many traders figure if Iran does hit any U.S. assets, the President will respond overwhelmingly, and that uncertainty scares them.
There are a lot of significant developments over the last week or so that we'll chronicle here, and while the top line has not changed much, the maneuvering behind the scenes, and the rotting away of the Iranian economy driving that maneuvering, is very interesting.
President Trump has had enough of Iran negotiators' duplicity. They give him what he wants in meetings, and then go public and demand that America cave and pay for all the damage inside Iran we've caused. The President is no longer seeking a deal, even after Jared Kushner and Steve Witkoff reported there were positive developments. Trump is disinterested. In addition, he's changing his demands.
Although not Biblically accurate, Charlton Heston in The Ten Commandments told Yul Brynner's Pharoah that the last plague visited upon Egypt would be by Pharoah's own lips. Pharoah ordered the firstborn Hebrews to be killed. God, in the movie, turned that back on him. Donald Trump is doing the same thing to the Iranians. After the absurdity of regime members ordering war reparations as part of any agreement, the President bogarted that idea for his side of the equation on any future deal.
— Rapid Response 47 (@RapidResponse47) August 10, 2026
Quite simply, Iranian bluster and bravado has been enough to get by with every other American, Middle Eastern, or European leader up to now. But they've never encountered someone willing to use their tactics back at them while continuing to throttle the lifeblood out of them. And there are a few more turns in the tourniquet ready to tighten the sanctions grip further.
#BREAKING The United States will impose measures on Iran that have “never been seen,” Treasury Secretary Scott Bessent said Thursday in an interview with Newsmax.
— Iran International English (@IranIntl_En) August 13, 2026
“We are going to apply measures that have never been seen on Iran,” Bessent said.
The existing sanctions regime and blockade are enough to bring down the Iranian regime in Tehran over time, but ratcheting sanctions up by Scott Bessent at Treasury will hasten the process. Regime change may be an unstated goal of the Americans, but it is very obvious that it is now a desired outcome once Operation Economic Fury reaches its natural conclusion. Even the Israelis who wanted regime change from the outset of kinetic action are beginning to realize Iranian leadership is not long for this world.
🚨🇮🇱🇺🇸 BREAKING: IDF Chief of Staff Eyal Zamir informed cabinet ministers that the maritime blockade on Iran is proving highly effective.
— C14 News | EN (@c14english) August 12, 2026
According to emerging US assessments, continuing this intense economic pressure is now viewed by top officials as the most effective strategy…
In my column last week, I gave you some specifics of how effective the blockade is. The anecdotes are increasing, and it's leading the regime to feel cornered, with lashing out as about the only card left to play.
Kharg Island, which used to be the loading platform in the Persian Gulf for decades of Iran's oil industry, just went six weeks without a single tanker docking. Iran is simply no longer exporting oil. They have throttled back oil production to the levels necessary to feed Iran's functioning refineries in order to convert it into gasoline and diesel. Of course, that does nothing for their cash flow crisis. And it causes another lose-lose situation.
Iran has always treated gasoline as a loss leader. The regime has subsidized fuel down to a ridiculous price in order to essentially buy their citizens off. If you're only having to pay the equivalent of $.15 cents a gallon at the pump, you're much less likely to take to the streets and protest. The last time the regime tweaked with the subsidy, tripling the net cost of gas, protests and riots began immediately. The regime is loathe to do that again, but they're in a bind. They have no money to keep subsidizing it, and they cannot refine enough gasoline to meet demand. If gas were groceries, Iran is Zohran Mamdani's new public markets. From Iran International English on X:
The US naval blockade has added to economic pressure by disrupting trade and effectively cutting off gasoline imports, Iranian lawmaker Reza Sepahvand told ILNA on Saturday. Iran is producing about 130 million liters of gasoline a day against consumption of 137 million liters.
Lines to buy limited rations of gas are ubiquitous.
A video posted on social media shows a long queue for gasoline in Chelgerd, Chaharmahal and Bakhtiari, in western Iran on Saturday, as a fuel crisis continues in cities across the country. pic.twitter.com/rZt7Ngpdtz
— Iran International English (@IranIntl_En) August 15, 2026
Long gasoline queues formed in Zahedan, with one man saying he had been waiting since 3:30 a.m. and was still in line at 7 a.m. to receive just 10 to 15 liters of gasoline, according to a video sent to Iran International. pic.twitter.com/29QdhPHzgu
— Iran International English (@IranIntl_En) August 14, 2026
A four-hour wait in the middle of the night for the ability to pump in four gallons of gas? I just pumped 34 gallons into my Ford truck two days ago at Costco. Was there a line? You bet. They're always a bit cheaper than other brands of gasoline. But they had gas, as every station in America does, and I got in and out in about 15 minutes.
"They've allocated 15 liters of gas per car. Just sitting here for half an hour, they use up four to five liters of gasoline." Iranians are waiting in huge lines for fuel amid shortages, braving high temperatures as the ongoing war with the US disrupts fuel supplies. pic.twitter.com/iUtE7RHdOt
— Radio Free Europe/Radio Liberty (@RFERL) August 14, 2026
Now calculate in 120-degree temperatures, and burning a gallon-and-a-half to run air conditioning while you're inching your way through the line, and eventually driving away with about two-and-a-half net gallons more gas than you started the day with. That doesn't sound like a sustainable Iran to me.
🚨 Iran’s Regime Tries to Raise Gasoline Prices, Then Panics and Retreats
— Ehsan Eghbal Eslami (@Ehsaneghbale) August 13, 2026
On Wednesday, state media quoted Pezeshkian government officials announcing that gasoline would be sold at 87,200 tomans per liter in Kerman, citing “full refinery cost” and the need to “prevent… pic.twitter.com/rekWB5k1Cl
In one part of Iran, they flirted with the idea of lifting the subsidies and charging market price. It was a disaster, and they immediately pulled that back, fearing the hordes in the streets.
Iran’s Gasoline Crisis Is Entering a New Phase
— NIAC (@NIACouncil) August 14, 2026
🔹Iran’s long-running gasoline imbalance is becoming increasingly difficult to manage as wartime damage, the renewed U.S. naval blockade, rising consumption and shrinking resources for fuel imports converge.
🔹The impact is already…
They're still subsidizing it for now, but they have no solution for the daily shortage, and they have no money to afford to throw away on the subsidies.
Food is a luxury item now in Iran. Milk and eggs? Those were the good old days. Shopping lists are being pared down to the absolute essentials to survive for most Iranians. Roya Maleki and Frud Bezhan report for Radio Free Europe/Radio Free Liberty:
Every week, the shopping lists of Iranians become shorter as inflation soars and purchasing power plunges.
“As things disappear from the dining table, fruit goes first, then dairy products, then anything considered non-essential,” a woman in the Iranian capital, Tehran, said in an audio message sent to RFE/RL’s Radio Farda.
“Ultimately, everything we buy is only essentials, but even then, nothing is affordable,” added the woman, who spoke on condition of anonymity for security reasons.
She is among the millions of Iranians who are grappling with the economic fallout from Iran’s five-month-long war with the United States and Israel.
Potatoes and eggs have doubled in price...in a week. The average take home pay of an Iranian making minimum wage is the equivalent of $100 a dollar a month. An average family of four is spending 70 percent of their income on food. The assessment of one Iranian woman interviewed for this story?
The 48-year-old woman, who spoke on condition of anonymity for security reasons, said many Iranians are “quietly heading toward death.”
And CNN reports Winter is coming:
Iran could face gas supply shortages in several provinces this winter following damage to the country’s natural gas infrastructure during the US-Iran war.
Houshang Seydali, director of gas distribution coordination at the National Iranian Gas Company, warned that “without strong, coherent and coordinated plans, several provinces could experience gas-supply problems,” according to Iran’s state-run Islamic Republic News Agency (IRNA).
He said three northern provinces, North Khorasan, Mazandaran and Golestan, “could face more difficult conditions,” while restrictions could be imposed on eight other provinces depending on pressure levels and conditions across the gas network.
70 percent of your income on food. Good thing rent is cheap. Oh, wait. More from Iran International English:
Rents rose 31% year-on-year in March, while Iranian media reported housing prices in Tehran about 50% higher than a year earlier. The dollar value of Iran’s minimum wage has also fallen from about $105 to $86 since late March, Reuters reported.
Do you see that last stat — real wages have fallen while everything has skyrocketed in cost? Here's what retail centers in Iran look like now.
Iran’s cost-of-living crisis continues to hit the public: footage from today shows a wholesale market in an Iranian city almost completely empty of customers. Amid inflation, rising food prices and economic pressure, more Iranians are struggling with everyday expenses. pic.twitter.com/wWuthbaI2R
— DDF NEWS (@ddfmarketing1) August 17, 2026
Iran’s economic crisis: footage from a major market in Tehran shows commercial streets nearly empty of customers, with very little foot traffic between shops. Business owners say some areas can go for long periods with almost no buyers at all. Amid the blockade, damaged… https://t.co/w1x6J8N2ST pic.twitter.com/fSNMmIVKy1
— DDF NEWS (@ddfmarketing1) August 16, 2026
There's an old expression used to sell people on supplemental income programs — you have more month than money. If you are an average Iranian living in Tehran, your money runs out...on Day 8.
The economic fallout from the war in Iran is now visible on both sides of the employment relationship: in factories that need money for repairs, raw materials and continued operations, and in working-class households whose incomes are falling further behind rising costs. A report by Jahan-e Sanat says around 1,400 businesses damaged in the war have yet to receive “even a single rial” in loans. At the same time, calculations by labor activist Faramarz Tofighi show that by the end of Tir, the monthly pay of a worker with one child, including all benefits, covered only 27.58 percent of minimum living costs — equivalent to 8.27 days of a month.
You can see the doom loop spinning into hurricane force. The central bank of Iran, which has no money, is simultaneously floating loans to businesses with cash it does not have. Those loans don't even cover the damage to dual-use facilities that also helped build Iran's nuclear and missile program once. These are loans for businesses just to get by and stay in business. At the same time, the central bank of Iran is issuing loans to individuals who don't have jobs, or do have jobs but cannot remotely make ends meet, because they can no longer afford anything at the businesses not doing any business.
And when you're loaning out money you don't have to both ends of a market transaction not taking place in order to foment business, you have to do things like issue new 10-million rial bills that are worth almost $7 dollars. Hyperinflation is rampant.
How bad is the Iranian economy? Kids that go to an Iranian regime school today have books showing Ali Khamenei as the Supreme Leader, even though he became worm food almost six months ago. Why? Iran no longer has the paper available to produce new books.
Iran could not revise all school textbooks following the death of former Supreme Leader Ali Khamenei because replacing books already printed would consume too much paper, an education official said.
— Iran International English (@IranIntl_En) August 18, 2026
The head of Iran’s Educational Research and Planning Organization said about 163… pic.twitter.com/Z8TQGqn9qz
You see, all these things that Iranians would love to be able to buy again one day — paper, food, grain, gasoline — that all used to come in on cargo ships through the Strait of Hormuz. Never fear, however. The regime has a solution. Trucks. 'We'll just use the land route,' the regime says. One problem?
Replacing a single ship carrying essential goods to Iran would require about 2,500 trucks, a Chamber of Commerce official warned, saying land routes cannot offset the US maritime blockade and negotiations are the only realistic way to restore trade.
— Iran International English (@IranIntl_En) August 13, 2026
Davoud Rangi, vice chair of… pic.twitter.com/fq20A6iUBe
2,500 trucks to bring in the containers that would otherwise be laden on a cargo ship in an Iranian port. And those 2,500 trucks need diesel to haul it from the Caspian Sea or over the mountains from the east.
I could go on, but you get the point. Iran has become Cuba. It's a failed state. They certainly have vast more resources than Cuba, but Donald Trump has taken away their ability to monetize those resources. At some point, the misery of life and gradual starvation for Iranian citizens reaches a threshold where they no longer fear being shot dead in streets. A quick end struggling for revolution is better than watching your entire family starve to death. The regime knows this, too.
Iran’s leaders are increasingly concerned that tougher US economic measures could deepen hardship and trigger renewed nationwide protests, Reuters reported Monday, citing Iranian officials and political insiders.
Three Iranian officials told Reuters that mounting domestic pressure posed a growing risk as the country deals with high inflation, a weakened currency, energy shortages, war damage and disrupted trade.
And then there's this.
🚨 The Islamic Republic fears another wave of mass protests as its social base continues to erode.
— The Iran Watcher (@TheIranWatcher) August 15, 2026
A leaked recording obtained by Iran International from a confidential IRGC-Basij media and cyberspace command meeting in Pakdasht reveals deep concern over renewed unrest,… pic.twitter.com/Zi82lRb5MG
So when Donald Trump says the blockade and sanctions are working very well, he's not lying. As a matter of fact, they're working too well. So well, the regime is thinking the Butch and Sundance Bolivian escape plan is viable.
🚨Iran just put a $30,000 price on the head of every American service member.
— Brigitte Gabriel (@ACTBrigitte) August 17, 2026
$60,000 if a woman does the killing.
This is not “escalation.” This is the true face of the regime we are dealing with.
Don’t reduce a cash bounty on American blood to “rhetoric.”
This is who they… pic.twitter.com/ZXNLGQNTFb
Latest from Iran via Reuters:
— Open Source Intel (@Osint613) August 17, 2026\
• Iran has decided to shift its policy from “defensive” to a “fully offensive” posture.
• Applying pressure on the US or relying on mediators to achieve lasting peace is not realistic, according to the official.
• Iran has given the US a…
BREAKING: Iran's IRGC has finished planning massive preemptive strikes against US and Israeli targets, accelerating missile production and an escalation plan that includes cutting the 7 main undersea internet cables in the Persian Gulf and a potential ground incursion in Kuwait…
— The Hormuz Letter (@HormuzLetter) August 17, 2026
They already fired a couple missiles at U.A.E. today, and the Houthis made noise against the Saudis, but so far, Iran has not targeted the U.S. in the region or Israel. Why not? Deterrence. Both countries will kill Iranian regime members and break things, many of them permanently, if Iran picks this fight.
But increasingly, and this helps explain why the speculators on the oil markets think trouble is ahead, the regime may feel like the only way to keep the people from taking to the streets is to take on the Big and Little Satan once and for all. It didn't work out so well for Butch Cassidy and the Sundance Kid, and it's not going to work out for the regime.
Instead of reacting to demands that the United States return to compliance of the now-defunct Memorandum of Understanding, meaning just give them money, Donald Trump should keep squeezing, add in the promised extra torques by Secretary Bessent, and be prepared when they do attack out of desperation to blow them to kingdom come.
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