Iran faces economic hardship as war drags on

Iranian leaders are acknowledging the economic toll of war with the United States, with the supreme leader calling on the government to address the hardship while the president reported foreign trade has shrunk by more than one-third due to the American sanctions and blockade.

Supreme Leader Ayatollah Mojtaba Khamenei, who was injured and has not been seen publicly since the February 28 attack that killed his father, former Supreme Leader Ali Khamenei, called on the government to tackle the economic hardship.

"There is the need to seriously address the chain of economic and livelihood challenges, such as inflation, unemployment, management of prices and the market for goods and services," said a written statement attributed to Khamenei.

Iranian President Masoud Pezeshkian told state media that Iranian exports and imports slumped nearly 35% because of US sanctions and a naval blockade of Iranian ports.

The warnings come even as other Iranian leaders threaten the US with military retaliation, while the Iranian navy says it still has control of the Strait of Hormuz, the strategic waterway giving Iran leverage through its ability to disrupt global energy markets.

With the war now at the six-month mark, and negotiations at an impasse, President Donald Trump's administration has stepped up efforts to punish Iran financially with what it has billed as an "economic D-Day."

With the US focused on its economic pressure campaign, others have sought to revive diplomatic efforts to end the war. Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani met with Iranian leaders in Tehran on Thursday. He said he had stressed during the meeting the importance of returning to the pre-war status of open shipping through the Strait of Hormuz.

Iranian Foreign Minister Abbas Araghchi on Friday described the talks with Al Thani as "creative." Qatar and Pakistan helped broker the June memorandum of understanding that led to a brief ceasefire before disagreements over the strait caused it to unravel.