Six weeks into a military conflict that has drawn US and Israeli strikes on its territory, Iran is grappling with an economy already battered by decades of sanctions — now pushed further toward the edge. Yet despite the damage, the government in Tehran has not collapsed financially, largely because oil revenues have continued to flow, providing a critical cushion against the worst of the pressure.

The scale of the destruction is significant. Iranian authorities estimate the cost of damage at nearly $270 billion, with ports, roads and more than 20,000 industrial sites reported destroyed or severely disrupted. Among the hardest-hit sectors is the steel industry, a cornerstone of the broader Iranian economy. Strikes on facilities including a major plant in Isfahan — a city in central Iran and one of the country's main industrial hubs — have sent shockwaves through supply chains. Steel underpins roughly 40% of Iranian industry, meaning disruption in that sector ripples into food processing, automobile manufacturing and dozens of other sectors. Researchers estimate that between 40% and 45% of Iranian industry is now at risk of grinding to a halt.

The human cost is mounting rapidly. Consumer spending has collapsed, particularly outside major cities like Tehran, where residents have sharply cut back on purchases. Retail businesses — clothing shops, food stores and small traders — have closed in large numbers due to lack of customers. The retail and distribution sector alone accounts for around four million jobs. Overall, analysts estimate that between 10 and 12 million jobs are now under threat, representing roughly half of Iran's active workforce. Meanwhile, ordinary Iranians are contending with accelerating inflation, currency depreciation and growing shortages of basic goods.

The Strait of Hormuz, the narrow waterway through which a significant share of the world's oil passes, has emerged as a focal point of the broader economic confrontation. Control of the strait represents substantial leverage for both sides. Any disruption to oil flows through it would affect not only Iran's revenues but global energy markets. Iran's ability to keep selling oil — despite existing sanctions — has so far prevented a complete financial collapse.

Why this matters: Iran's economic resilience or fragility will shape both the trajectory of the conflict and any future negotiations. At the diplomatic level, sanctions relief, frozen assets and potential war reparations are all reported to be on the table. For the millions of Iranians already living under economic pressure, the outcome of those talks — and the pace of reconstruction — will determine whether the current hardship deepens into a prolonged crisis.