Senior Iranian officials admitted to the Supreme Leader that the U.S. naval blockade was crushing the economy

As the regime weighed whether to sign the memorandum of understanding to reopen the Strait of Hormuz and extend the ceasefire, officials were divided between pragmatists who favored an agreement and hardliners who wanted to keep fighting. Meanwhile, the supreme leader hesitated.

President Masoud Pezeshkian, a pragmatist, turned to Khamenei and told him that the economic situation was bad, the US naval blockade was crippling and that he would resign if the deal was not approved. Senior Iranian officials said this New York Times.

At the same time, the head of Iran’s central bank sent a letter to Khamenei warning that the country was facing a severe budget crisis, was unable to sell oil through alternative trade routes in the required quantities, and would run out of essential food and medical supplies by the end of August if the blockade was not lifted, the report added.

The president’s and central bank’s dire assessments helped persuade Khamenei to give his blessing to the MOU, even though he said he opposed it “on principle,” sources said Just.

Iran’s representative to the United Nations did not immediately respond to a request for comment.

The report comes as the US and Iran have renewed their military standoff over the Strait of Hormuz, with Tehran seeking to close an alternative route that skirts Oman’s coast and bypasses a regime-controlled canal.

While President Donald Trump declared the ceasefire over, both sides continue to hold talks on a permanent peace agreement. However, shipping traffic through the Strait of Hormuz ground to a halt due to renewed fighting, particularly along the U.S.-backed route, tightening Iran’s control over the critical energy bottleneck.

Trump reimposed U.S. sanctions on Iranian oil sales and said he would consider reinstating the naval blockade that diverted 139 ships and disabled nine when it was in effect from mid-April to mid-June.

Stopping the flow of ships carrying Iranian oil deprived the regime of an important source of revenue and further weakened an economy that had already been faltering before the war began.

Dan Alamariu, chief geopolitical strategist at Alpine Macro, said in a note Wednesday that the U.S. could try to break open the strait with military force, adding that current military operations suggest the U.S. may be positioning itself for that option.

Another approach is to “economically wear down” Iran by re-imposing a naval blockade, which he described as the “path of least resistance” unless the MoU is reconfirmed.

Alamariu predicted a new deal may be necessary. But further fighting, a blockade, or both are possible along the way.

“Ultimately, both sides need an early agreement given the domestic vulnerabilities: looming midterm elections in the US and Iran’s economic and political weaknesses,” he said. “A new agreement is therefore entirely possible, probably even within a month or two (or sooner), although the timing and escalation paths are still very uncertain. The current attacks and counterstrikes are an opportunity for negotiation as both the US and Iran seek to build greater influence.”

Robin Brooks, a senior fellow at the Brookings Institution, was one of the first advocates of a naval blockade and suggested ways to tighten it even further.

In the first version, empty oil tankers were allowed to enter the Persian Gulf, where Iran was storing oil it could not export, giving Tehran more leeway before it had to stop producing crude.

Since signing the MoU, Iran has been able to sell all of its oil, easing pressure on its infrastructure and providing windfall revenue.

In one Substack post On Thursday, Brooks suggested that a second blockade should prevent empty tankers from entering the Gulf and that storage tanks could be sabotaged or destroyed. He added that Iranian export terminals could be disabled.

“These three things together would make a second iteration of the blockade more effective and make up for lost time,” he wrote.