An Iran government supporter raises the national flag during a Tehran rally, April 27, 2026. Image credit: AP
(The Post News)- In Iran’s historic carpet-producing regions, industrial activity has nearly collapsed. Dairy producers are struggling to secure packaging for milk and butter, while major steel plants that once powered the economy have shut down. Hundreds of thousands have already been laid off, and millions more jobs are now under threat.
After more than five weeks of sustained strikes, US and Israeli attacks have damaged thousands of factories across the country. The impact is spreading through the economy, triggering rising unemployment and sharp price increases. Chicken prices have surged by about 75% in a month, while beef and lamb have climbed by around 68%. Dairy goods have also become roughly 50% more expensive.
The situation could worsen further as the United States tightens restrictions on Iranian ports, limiting imports and oil exports that generate billions of dollars in revenue. Economic hardship has previously driven large protests in Iran, which were violently suppressed, and renewed pressure could again push citizens into the streets.
At the same time, Iran is using its strategic position in the Strait of Hormuz as leverage over global energy flows. Its leadership says the key shipping route will remain restricted until the blockade is lifted and hostilities end. Officials believe the country’s long experience under sanctions has prepared it to endure economic pressure longer than US President Donald Trump expects.
Iran Job Losses Reach Crisis Levels
Iran has already lost at least one million jobs directly due to the conflict, according to Deputy Labor Minister Gholamhossein Mohammadi, as reported by state media. Economists warn that the wider fallout could put between 10 and 12 million additional jobs at risk, nearly half of the country’s workforce. The pressure is intensifying on households already facing soaring living costs.
Steel and Petrochemical Shutdowns Cripple Exports
Israeli strikes have targeted Iran’s industrial infrastructure, officially linked to paramilitary sites but extending far beyond them. Around 20,000 factories—about a fifth of Iran’s production units have been damaged, according to economic estimates.
Key sectors have been severely affected. Tofigh Daru, the country’s largest pharmaceutical holding company producing cancer drugs and other medicines, was hit. Facilities producing optics, chemicals, aluminium, and cement were also damaged.
Most damaging has been the disruption to steel and petrochemical industries. Major producers such as Mobarakeh Steel and Khuzestan Steel have halted operations, along with numerous smaller mills. More than 50 petrochemical complexes have reportedly shut down. These sectors form the backbone of Iran’s major non-oil exports, and their collapse has driven up prices for plastics, construction materials, packaging, and everyday goods.
Internet Shutdowns and Protests Deepen Economic Strain
Beyond physical destruction, economic pressure is being worsened by ongoing internet restrictions imposed since earlier protests. Small and medium-sized businesses that depend on online sales have been heavily affected.
Even before the latest blockade, tensions were rising after Iranian strikes on the United Arab Emirates disrupted trade routes, forcing a reduction in imports. Earlier this year, mass protests driven by inflation escalated into political unrest calling for major change, prompting a harsh crackdown by authorities.
Officials are now attempting to reassure the public that the economy can withstand the crisis. Plans include expanded unemployment support, but the social security system itself is under strain as state revenues fall, especially since it depends heavily on profits from petrochemical and industrial holdings.
The US blockade threatens a major portion of Iran’s income, with the country exporting around $98 billion worth of goods in 2025—almost half from oil. However, analysts note that a full economic shutdown is difficult, as roughly half of non-oil trade moves through land routes and Caspian Sea ports.
Some economists also argue that Iran has built significant buffers over years of sanctions. The country reportedly holds large reserves of essential goods, including enough electrical machinery for about eight months, cement for nearly six months, and iron and steel for around four months. These reserves could be stretched further through rationing if necessary.
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