October 1, 2026
Iran’s currency fell to a new record low on Tuesday, with traders in Tehran exchanging more than 2.5 million rials to the U.S. dollar in a stark reflection of how the war in the Middle East has steadily eroded the Iranian economy.
The latest decline came just 27 days after the rial hit its previous record low of 2.2 million to the dollar on Sept. 2. The currency has repeatedly reached new lows since the war began in February.
The Iranian economy has been under duress for years in the face of international sanctions. But a U.S. naval blockade on Iranian oil and new sanctions imposed since the start of the war have sent it into freefall.
Meanwhile, Iran’s top diplomat said indirect negotiations with the United States aimed at reopening the critical Strait of Hormuz have become “more serious."
Foreign Minister Abbas Araghchi told Iranian media late on Monday that the “current focus is solely on the Strait of Hormuz,” the chokepoint of the war.
Araghchi made the comments shortly before departing New York — where he attended last week’s gathering of world leaders at the U.N. General Assembly — and after meeting with Pakistani and Qatari mediators.
Araghchi said that the Qatari intermediaries were expected to soon engage with the U.S. side.
“They are set to raise the matter with the American side once more, after which the final U.S. response will be conveyed to us,” Araghchi said. “If there is a response, the Qataris will convey it to us and a decision will be made in Tehran on that basis.”
Officials, including from the U.S., have confirmed to The Associated Press that mediators are working with Iran and the U.S. on trying to broker a deal to end the fighting and open the strait.
The mediation efforts continue even after U.S. President Donald Trump earlier this week rejected an Iranian proposal to reopen the strait in seven days if the U.S. agreed to lift its blockade of Iranian ports, release frozen Iranian assets and waive sanctions on Iranian oil sales, among other conditions.
Trump and his top aides are insistent that Iran’s economy cannot sustain a conflict much longer and have expressed confidence that Tehran will be forced to capitulate.
U.S. Secretary of State Marco Rubio in a Monday appearance on Fox News said Iran was heading toward an economic “cataclysm.” Administration officials say that a combination of new sanctions and a U.S. naval blockade aimed at preventing Iranian oil from going to market are having the intended effect.
“And so when you’re denying them money through oil sales and sanctions, you’re not just punishing them,” Rubio said. “You are preventing them from getting access to money that they will use to try and kill Americans and others around the world and their own people and build weapons and threaten the world and ultimately break out to a nuclear weapon program."
In a separate development, a crucial oil pipeline in Saudi Arabia that was shuttered by the kingdom earlier this month after coming under attack is once again operating, according to a Saudi government official.
The official, who was not authorized to comment publicly and spoke on condition of anonymity, said operations are near pre-attack levels and that the pipeline should be running at its full capacity within a few weeks.
The kingdom relies on the East-West Pipeline, which runs the breadth of the country, to move its crude from oil processing facilities on the Gulf to ports on its western, Red Sea coast. From there, it can be put on tankers for export.
Saudi Arabia blamed an Iran-backed militia in Iraq for the drone attack that forced the temporary shutdown of the 745-mile pipeline.
Satellite imagery indicated that tankers on Sunday loaded some 12.5 million barrels of oil at the Yanbu export terminal, which is supplied by the East-West Pipeline, and the nearby terminal at Al Muajjiz, the data and analytics firm Kpler said in a report.
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