U. S. forces launched strikes on two Iranian missile launcher sites near the Strait of Hormuz on Sunday. This prompted a missile retaliation from Tehran, while Brent crude prices surged past $90 a barrel by Monday. The backdrop to these military exchanges was former President Donald Trump branding Iran a "Failed Nation, " claiming its economy and military were in tatters.
On Truth Social, Trump declared Monday morning, "Iran is officially a Failed Nation. IT IS DEAD!" He alleged that the nation had neither a functional navy nor air force, no currency of value, and unpaid soldiers and police. He further claimed that Iranian inflation had skyrocketed to 300%, accusing the leadership of being "in total disarray and incapable of properly representing the country."
The U. S. strikes targeted Larak Island after Islamic Revolutionary Guard Corps forces were seen prepping rockets with sea mines aimed at the Strait of Hormuz, a U. S. official stated. In response, Iran launched ballistic missiles towards U. S. bases in Jordan, though Jordan reported successfully intercepting eight missiles that breached its airspace.
Washington is ramping up its economic pressure on Tehran. Treasury Secretary Scott Bessent told Reuters on Sunday that the administration is planning to roll out additional secondary sanctions as often as weekly. These measures initially target banks, potentially excluding financial institutions that handle Iranian transactions from the U. S. dollar-based financial system.
Iran's leaders themselves acknowledge the growing economic pressure. President Masoud Pezeshkian stated that due to U. S. sanctions and a naval blockade, Iran's exports and imports have plunged by nearly 35%. Official Iranian data cited by Reuters on Aug. 29 indicated annual inflation at 66% in July, while the IMF forecasts a 5.4% contraction in Iran's economy this year and predicts average consumer-price inflation of 68.9% by 2026.
Miad Maleki, a senior fellow at the Foundation for Defense of Democracies (FDD), suggests the Islamic Republic might be nearing an economic breaking point. Maleki, who previously managed U. S. sanctions on Iran at the Treasury's Office of Global Targeting, told Fox News Digital that the signs indicate an economy "on the verge of collapse, if it hasn't already collapsed yet."
The critical pressure point, Maleki argued, is Iran's ability to convert oil exports into usable revenue. He estimates Tehran needs roughly 1 million barrels of oil exports per day to maintain stability, around 1.5 million to stave off hyperinflation, and about 2 million to support development. According to Kpler data cited by Reuters, Chinese imports of Iranian crude have fallen from an average of 1.4 million barrels per day in 2025 to a provisional 534,000 barrels per day so far in August.
Tehran is increasingly relying on money creation instead of cutting politically sensitive salaries and pensions, Maleki noted. But this has limits. "They can keep printing money, but they can't really print the type of commodities that they need, such as gasoline, such as wheat, " he said.
This pressure, however, could create a dangerous paradox. Danny Citrinowicz, an Iran analyst at Israel's Institute for National Security Studies and the Atlantic Council's Scowcroft Middle East Security Initiative, warned that continued economic pain might increase Tehran's incentive to escalate. He suggested Iran could target "U. S. economic assets in the Gulf, " ports, or U. S. vessels enforcing the blockade, even with degraded missile-production capabilities.
Maleki agreed that Iran would likely attempt to escalate, pointing to the recent attacks. But he questioned the extent of Tehran's remaining leverage. Further escalation, he argued, would increasingly impact Gulf states that Iran has relied upon for trade, sanctions evasion, and diplomacy, potentially leading to even greater economic and diplomatic pressure. He concluded that Tehran has emerged weakened from internal unrest and external conflict, becoming more isolated domestically and internationally.
What Maleki is watching next are not missed government payrolls, but shortages that could trigger another wave of domestic unrest. "What I'm looking for is shortages of items such as gasoline, " he said. "Right now they're fighting a war inside Iran that is way more challenging to the regime than it is from external forces that they're facing."
Commercial traffic through the Strait of Hormuz remained severely disrupted on Monday. Brent crude climbed more than 2%, surpassing $90, as markets reacted to the renewed U. S.-Iran exchanges. Reuters reported on Aug. 31 that Gulf oil flows have recovered from wartime lows but remain below pre-war levels.
Maleki expects Iranians to return to the streets and urged Western governments to prepare to assist them in communication and organization if Tehran again shuts down internet access. He advocated for containing the regime, cutting its economic lifeline, and empowering the Iranian people. "At this point, they are the weakest they've been since 1979. Every time they try to escalate, they become weaker, " Maleki stated.
