As negotiations edge towards a ceasefire, Tehran is trying to blame the country’s economic collapse on the war and foreign pressure.

Yet the data tell a different story: Iran’s economy was already structurally broken before the war. Years of ideological policymaking, institutionalised corruption, and the militarisation of the economy have caused Iran’s economic ruin. 

Iran has been in a state of permanent economic emergency since at least 2018. Official inflation has remained above 40% year after year, destroying the country’s middle class.

World Bank estimates show average inflation in the high 30s for most of the 2018–2025 period, with spikes of up to 60%, driven by massive currency depreciation and the constant monetisation of fiscal deficits. 

For half a century, the Strait of Hormuz was Iran’s weapon. Today, it is its noose. The mathematics of energy have flipped, and with them the balance of coercive power in the Persian Gulf.

Iran’s implicit deterrent was geographic, spanning from the tanker wars of the 1980s to the sanctions standoffs of the 2010s. Almost 20% of global seaborne oil, and a similar share of liquefied natural gas, passes through the Strait. The formula was simple: any military confrontation that threatened the Tehran regime risked a closure that would halt trade supplies, spike crude prices, bleed Western consumers, and, above all, inflict pain on the United States, who was the world’s largest oil importer.

As of April 2026, the US and Israel are still at war with Iran. The war began on February 28 with surprise bombings that killed Supreme Leader Ali Khamenei and other high-ranking officials. Since then, attacks on infrastructure have continued, leading to significant disruptions in essential services and escalating tensions in the region. Iran has attacked targets in Gulf nations and tightened its grip on the Strait of Hormuz as a result.

The conflict has damaged the economy around the world, driving inflation and supply chain disruption fears.

The war is often considered a way to protect Israel, the Gulf nations, and, ultimately, the US against a brutal, theocratic dictatorship that was looking to build nuclear weapons and was the main financier of terrorism in the world. However, there is a common libertarian question: Do libertarian ideas support sending troops to other countries to stop tyranny?