Six Months Into US-Israel Conflict, Iran Endures Costly Economic Siege and Internal Divisions

Mourners gather commemorating the late Supreme Leader Ali Khamenei at the Imam Khomeini Mosalla Grand Mosque in Tehran, Iran, Tuesday, July 14, 2026. [Majid Saeedi/Getty Images] It has been six months since the United States and Israel launched their coordinated military campaign against Iran on February 28. While easily framed as the latest turn in long-standing antagonism between Washington and Tehran, the conflict's immediate context lies in the aftermath of October 7, 2023, and Israel’s war on Gaza that eventually pulled Israel and Iran into the 12-day war of June 2025 and the current campaign.

Nearly eight years prior, Trump’s first administration launched “maximum pressure” to drive Iranian oil exports to zero. When political change failed to materialize, economic coercion shifted to military force, and six months into the war, the campaign has returned to intensified economic pressure. At the 100-day mark, Tehran presented its survival as a victory, but six months on, that claim faces severe strain as the conflict targets Iran's economic vulnerabilities.

The most visible leadership change is at the summit. Following the assassination of Supreme Leader Ali Khamenei in the opening strike, his son Mojtaba was appointed just over a week later. However, six months later, he has yet to make a verified public appearance, with his portrait carried through city squares while decrees are issued in his name. Meanwhile, the state rebuilt its command structure mid-war following the deaths of IRGC commander Mohammad Pakpour and armed forces chief of staff Abdolrahim Mousavi. On August 10, decrees formalized new military leadership, naming Ahmad Vahidi as IRGC chief and Ali Abdollahi as chief of staff, favoring loyalty and continuity.

Washington intensified its economic strategy following the suspension of strikes in early August. On August 24, the US Treasury launched Operation Economic Outcast to sever Iran’s remaining financial links through secondary sanctions on oil, measures against its “shadow fleet,” and stricter international enforcement. Consequently, Iranian oil exports dropped below half a million barrels a day from 1.8 million, while inflation approaches 90 percent and food prices have doubled. This economic distress compounds long-standing structural exposure from decades-old US sanctions and unfulfilled partnerships with China and Russia.

This pressure has exacerbated diverging narratives in Tehran. President Pezeshkian has acknowledged the collapsing economy, suggesting it would be better to end the war while in a position of strength. Conversely, Parliament speaker and chief negotiator Mohammad Bagher Ghalibaf emphasizes that hunger and a lack of financial circulation pose the greatest threats, though he remains aligned with the security establishment's stance that diplomacy requires readiness for war. With the Strait of Hormuz closed since February 28 and a naval blockade restricting trade, Iran's leadership faces a difficult choice between negotiating a settlement that risks internal fracture or holding out against a debilitating economic siege.