Iran's digital economy battered by prolonged blackout

The disruption has cut off companies that depend on global connectivity, from e-commerce retailers to freelance service providers.

With access largely limited to domestic platforms, many users cannot reach essential global tools such as search engines, email services and widely used social media networks.

Iran’s digital economy accounts for an estimated 5% to 6% of the country’s gross domestic product, underscoring the scale of the impact.

According to Communications Minister Sattar Hashemi, the shutdown is costing more than $35 million per day—roughly $1.5 billion since the start of the conflict.

Independent estimates suggest the losses may be even higher. Afshin Kolahi, a representative of Iran’s Chamber of Commerce, has said the total daily economic damage, including indirect effects, could reach $80 million.

Officials say the restrictions are necessary to counter cyberattacks targeting government infrastructure. Many Iranians, however, believe the shutdown is also intended to make it harder for protests to spread.

‘Completely bankrupt’

Many small businesses have shut down or are close to collapse, while millions of workers have been partially or entirely pushed out of the economic cycle.

Entrepreneurs who once relied on platforms such as Instagram, Telegram and WhatsApp to reach customers have been cut off for more than six weeks. For many, rebuilding on domestic platforms feels like starting from scratch.

The challenge is particularly severe for businesses whose websites are hosted abroad. With only domestic domains widely accessible, many companies have lost access not only to customers but also to backend systems and data.

The disruption has also hit home-based producers, many of them women, who rely heavily on social media to market their products. Many had already lost customers during the 12-day war in June and the unrest earlier this year.

Some entrepreneurs say the shutdown has wiped out their income.

Amir, a YouTube podcaster, wrote that his income from YouTube, Instagram and other platforms had dropped to zero.

“I am completely bankrupt,” he said. “I can’t pay my loan installments and have to sell my equipment.”

Another user who runs an embroidery workshop said the shutdown forced layoffs.

“Until forty-something days ago, I had 37 employees. Now I’ve only been able to keep five.”

Costly workarounds

In response to mounting pressure, authorities have introduced a limited system known as “professional internet”.

Under the program, business owners can apply for unfiltered internet access via their SIM cards by submitting documentation and paying a higher fee. The access, however, applies only to the individual subscriber and does not extend to customers.

Critics say the measure does little to help businesses whose clients remain offline.

“They still don’t understand that for these businesses to function, their customers also need internet access,” one user wrote.

Some rely on VPNs, satellite services such as Starlink, or roaming through foreign SIM cards. These workarounds often come at a high cost, forcing households to reprioritize spending.

“I cut down on everything else just to stay connected,” one user wrote on social media, describing internet access as essential not only for business but also for staying informed.

Enforcement against attempts to bypass restrictions has intensified. Text messages sent to users warn that unauthorized access to the international internet—through VPNs or proxy services—violates cybercrime laws and could lead to prosecution.

An underground market for VPN services has flourished on domestic platforms, often with high prices tied to data usage. Reports of fraud are also common, with users saying they paid for access that never worked.

Access has been selectively granted through a “whitelist” system covering certain media outlets, companies and universities, creating uneven levels of connectivity across sectors.

Authorities have also stepped up efforts to confiscate satellite equipment used to access services such as Starlink, further narrowing the few remaining pathways to the global internet.

The blockade, targeting Iranian ports and imposing partial restrictions in the Strait of Hormuz, took effect at 10 a.m. Eastern Time.

Iran’s heavy reliance on southern shipping lanes leaves its economy exposed to maritime disruption, with more than 90% of its $109.7 billion annual trade passing through the Strait of Hormuz.

The blockade is expected to cut off nearly all of Iran’s seaborne trade, wiping out an estimated $435 million in daily economic activity and forcing oil field shutdowns within weeks.

A blockade would effectively zero out Iran’s export revenues within days and trigger cascading effects across its financial system.

Oil exports would be hit first

Crude oil shipments would be the first and most severe casualty. Iran has been exporting roughly 1.5 million barrels per day, generating about $139 million daily based on wartime pricing assumptions.

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  Iran keeps oil flowing to China as Hormuz pressure forces reserve release

Nearly all of that volume departs via Kharg Island, which handles over 90% of crude exports and lacks viable alternative routes outside the Persian Gulf.

A blockade would eliminate these flows almost immediately, cutting off the Islamic Republic’s primary source of foreign currency earnings.

Petrochemicals and non-oil trade

Petrochemical exports, valued at roughly $54 million per day based on recent trade data, would also be halted. Facilities at Assaluyeh, Imam Khomeini, and Shahid Rajaei ports all sit within the Persian Gulf and depend on uninterrupted maritime access.

Non-oil exports – including minerals and metals – would see similar disruption. Of approximately $88 million in daily shipments, around 90% would be blocked, removing another $79 million a day in revenue.

Ports play a central role in this vulnerability. Shahid Rajaei alone handles more than half of Iran’s cargo operations, while Imam Khomeini is a key entry point for basic goods imports.

Bushehr ports handled about 57 million tons of cargo last year, underscoring how deeply Iran’s trade is concentrated in southern waters.

Limited alternatives beyond the region

Efforts to develop alternative export routes appear insufficient to offset losses.

The Jask terminal, designed as a bypass to Hormuz, operates far below its intended capacity, with effective throughput estimated at around 70,000 barrels per day.

Chabahar port and Caspian Sea facilities handle only a fraction of the volumes moved through Persian Gulf ports.

Combined, these routes could replace less than 10% of current volumes.

Imports and inflation pressures intensify

On the import side, Iran brings in about $159 million in goods daily, including industrial inputs, machinery, and food.

Disruptions to these flows would likely accelerate inflation, which has already surged. Food prices have risen sharply, with staple items such as rice increasing up to sevenfold in recent months.

Any interruption to imports would deepen supply shortages and place further strain on household purchasing power.

Storage limits create shutdown risk

A critical constraint lies in Iran’s oil storage capacity.

Iran has approximately 50–55 million barrels of onshore oil storage capacity, about 60% of which is already filled. Spare capacity stands at around 20 million barrels.

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  Iran shields its oil exports as Hormuz flows falter

With surplus production of 1.5 million barrels per day that is normally exported, this capacity would be filled in about 13 days. After that, Iran would be forced to shut in oil wells.

This is highly significant because when mature oil wells are shut, water from below can intrude into the reservoir – a process known as “water coning.”

In this situation, some of the oil becomes permanently trapped within rock pores and can no longer be recovered. Iran’s oil fields are already declining at a rate of 5–8% per year.

Forced shutdowns could permanently eliminate 300,000 to 500,000 barrels per day of production capacity – equivalent to $9–15 billion in annual revenue lost forever.

Currency faces renewed pressure

The loss of export revenues would also affect Iran’s currency markets.

The rial has already weakened sharply, trading near 1.6 million per dollar in unofficial markets, with inflation running close to 50%.

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  Dollar-pegged pizza in Tehran points to a different kind of regime change

A halt in foreign exchange inflows would likely intensify depreciation, further limit access to cash, and could push the currency toward hyperinflation.

Banks have already imposed withdrawal limits, reflecting existing financial strain.

Economic pressure builds rapidly

Taken together, the figures suggest a blockade would impose roughly $13 billion in monthly economic damage, combining export losses and disrupted imports.

Iran’s economic structure, heavily dependent on the Persian Gulf transit routes and energy exports, makes continued resistance economically impossible under the US naval blockade.

The figures show how quickly pressure could build if shipping lanes are closed, with immediate fiscal impacts followed by longer-term damage to production capacity and financial stability.

Across Iran’s political spectrum—from senior officials to hardline lawmakers—the failure of the 21-hour negotiations has been framed not as the end of talks but as a moment to test leverage, particularly around the Strait of Hormuz and Washington’s newly announced naval blockade.

Speaker Mohammad-Bagher Ghalibaf, who was part of the Iranian delegation in Islamabad, placed responsibility for the breakdown squarely on Washington while leaving room for further engagement.

In a post on X, he wrote that distrust toward the United States stems from “the experiences of the previous two wars,” adding that Washington failed to convince Tehran while leaving open whether the Americans could “earn our trust.”

President Masoud Pezeshkian struck a softer tone, signaling conditional openness to diplomacy.

“If the American government abandons its totalitarianism and respects the rights of the Iranian nation, ways to reach an agreement will certainly be found,” he wrote on X.

All about Hormuz

The Strait of Hormuz—through which roughly a fifth of global oil flows—has rapidly emerged as both a bargaining chip and a symbolic red line in Tehran’s messaging.

President Donald Trump announced a US naval blockade aimed at preventing vessels from entering or leaving Iranian ports and intercepting ships that pay transit fees to Tehran.

US Central Command said the blockade would begin Monday and apply to vessels of all nations calling at Iranian ports.

Iran’s Islamic Revolutionary Guard Corps Navy warned that any escalation in the waterway could have severe consequences, cautioning that “any miscalculation will trap the enemy in deadly whirlpools in the strait.”

Hardline voices have increasingly framed control of the waterway as a source of revenue and national prestige.

“From now on… we will have a third source of income called the Strait of Hormuz,” lawmaker Amir-Hossein Sabeti said at a pro-government rally.

University professor and commentator Foad Izadi suggested in a post on X that future confrontation could transform the strait into Iran’s “most important source of income,” while hinting that alternative export routes could become targets.

‘Taboo broken’

Some Iranian analysts warn that the US blockade risks pushing both sides closer to military confrontation.

Political analyst Ruhollah Rahimpour described the move as “beating the drums of war,” arguing that Washington is effectively testing Iran’s economic lifeline.

“Iran’s economy is locked into the chokepoint of Hormuz, and now Trump has decided to test this lock with a hammer,” he said. “In such a situation, either the lock opens, or the whole door will be torn off.”

Reformist voices, however, emphasized the historic nature of the talks themselves.

Former lawmaker Mahmoud Sadeghi described the direct engagement as “a major taboo-breaking moment,” noting the significance of Iranian and American officials meeting at such a level after nearly half a century.

Journalist Ahmad Zeidabadi similarly argued that failure in Islamabad “does not mean a definite failure of diplomacy,” warning that a return to full-scale war would produce an “irreversible catastrophe for all parties.”

Former Vice President Mohammad-Ali Abtahi also struck a cautious tone, writing that “47 years of open hostility cannot be resolved in a few hours.

President Massoud Pezeshkian described the truce as “the fruit of the blood of the martyred great leader Khamenei and the achievement of the presence of all people on the scene,” referring to Supreme Leader Ali Khamenei, who was killed earlier in the conflict.

Several lawmakers framed the development as a strategic success. Ebrahim Azizi, head of parliament’s National Security and Foreign Policy Committee, said the ceasefire reflected the “victory of the Islamic Republic” and the “surrender of the enemy.”

Skepticism toward the United States also remains strong among lawmakers.

Malek Shariati warned that Washington is “untrustworthy,” noting that despite accepting Iran’s 10-point proposal as a basis for talks, “given the record of US bad faith, we are highly pessimistic about the outcome of peace negotiations.”

Fazlollah Ranjbar said Iran should not trust the United States unless it fully accepts Iran’s conditions and pays compensation. However, he added that he supports the ceasefire because it was approved by the Supreme National Security Council and endorsed by Iran’s leadership.

‘Exhaustive war’

Meanwhile, the Islamic Propagation Coordination Council urged media and activists to avoid “any divisive remarks, spreading doubt or despair regarding the system’s high-level decisions, and giving a pass to enemy media narratives.”

Reformist figures have broadly welcomed the ceasefire while calling for domestic political change.

Esmail Gerami-Moghaddam, vice-chair of the Etemad-e Melli Party, said all branches of government and society should unite behind the decision. He criticized opposition groups for “appropriating” past protests and accused them of contributing to the outbreak of war.

Prominent commentator Ahmad Zeidabadi wrote: “Whatever negative judgments we may have about the officials of the Islamic Republic… it cannot be denied that in this exhausting war they acted boldly, fearlessly, and effectively.”

Praising diplomatic efforts, he added: “Without a doubt, this is a brilliant political victory for Iran,” predicting that opportunities for reform could expand while “the method of regime change will fade into the background.”

Podcaster Pouria Bakhtiari wrote sarcastically: “For God’s sake, now that you’ve made a ceasefire and negotiated with a 47-year enemy, try once to make a ceasefire and negotiate with your own people.”

‘Regime change’

Many opposition figures argue the ceasefire undermines momentum for political change and could embolden repression.

Saeed Ghasseminejad, an adviser to Prince Reza Pahlavi, criticized the truce, writing: “Regime change is still the best outcome for the US, Israel, and the Iranian people.”

Some social media users echoed that view. One wrote in Persian: “This level of happiness over a two-week ceasefire is not about saving lives or infrastructure—it is about hope for the survival of the clerical regime or the defeat of the Lion and Sun revolution.”

Others warned of possible consequences during the ceasefire period. One user argued that if executions continue, responsibility would lie with those who opposed the war and called for its end to protect infrastructure.

By Wednesday morning, several senior figures were already positioning themselves as the architects of the truce, and their competition quickly spilled into the Iranian media.

The pro-government ISNA news agency reported that parliamentary Speaker Mohammad Bagher Ghalibaf would lead Iran’s delegation to the talks scheduled to begin Friday in Islamabad, Pakistan. Within half an hour, the IRGC-linked Tasnim News Agency contradicted the report, saying the composition of the delegation had not yet been finalized by the “relevant institutions.”

The conflicting reports highlighted uncertainty over who would lead the delegation and underscored the rivalries that often shape decision-making in Tehran.

The first official statement on the ceasefire came from Foreign Minister Abbas Araghchi, a longtime diplomat with close ties to Iran’s security establishment.

In a post on X, he emphasized that he was speaking “on behalf of the Supreme National Security Council of the Islamic Republic of Iran,” and thanked Pakistani officials “on behalf of the Islamic Republic of Iran,” language that appeared to project broad institutional authority.

President Massoud Pezeshkian, who cannot join the negotiating team for protocol reasons, issued a largely symbolic statement—seemingly intended to remind the public that the country still has a president expected to lead the government. Like several other officials who had advocated a ceasefire from the outset, Pezeshkian framed the temporary truce as a “victory for Iran.”

Moments after Iran signaled its reluctant acceptance of the ceasefire, Nasim Online, an outlet close to the IRGC, published a statement from the Secretariat of the Supreme National Security Council.

The statement suggested that Security Chief Mohammad Bagher Zolghadr was also seeking to frame the agreement as a decisive achievement. It declared that “the enemy… has suffered an undeniable, historic, and crushing defeat,” and repeatedly urged the public to “celebrate the victory.”

Yet within minutes of the statement, Israel and Jordan reported intercepting Iranian missiles. Later on Wednesday, Kuwait came under drone and missile attack. The incidents highlighted the fragile nature of the ceasefire and the difficulty of enforcing it across multiple actors involved in the conflict.

Israel’s heavy strikes on Beirut later that day further underscored the instability of the truce. US Vice President JD Vance publicly described the ceasefire as “fragile.”

In the early hours of Wednesday, Iranian-aligned groups in Iraq initially appeared unwilling to honor the ceasefire. But when they released a female US journalist they had taken hostage earlier in the week, the move suggested Tehran still retains influence over some allied militias and could signal a willingness to ease tensions.

From the tone of several officials in Tehran, particularly those aligned with more pragmatic political currents, it appears that many believe President Trump has concluded the conflict has reached its limit and that he does not want further escalation.

Tehran appears to share that assessment. Both sides have claimed victory, a framing some politicians describe as a “win-win agreement.”