Iran Currency Collapse: U.S. Sanctions, Naval Blockade, and International Law
Introduction
The Iran currency crisis did not begin with the 2026 war or the subsequent U.S. naval blockade. By 27 January 2026, the rial was already trading at roughly 1.5 million to the U.S. dollar in Tehran’s unofficial market, amid longstanding sanctions, severe economic strain, and protests that had begun the previous month after another sharp fall in the currency (Reuters, 27 January 2026). The later conflict intensified an existing monetary crisis rather than creating one.
The decline accelerated during the year. On 3 October, Reuters reported a free-market rate of approximately 2.688 million rials to the dollar, with another market tracker placing it slightly lower still. The same report stated that the rial had lost more than half of its value over the preceding year, while inflation was running above 70 percent. Iran’s central bank responded by announcing that state banks would sell up to $2 billion in foreign currency in an attempt to support the exchange rate (Reuters, 3 October 2026). These figures refer to the free market and should not be confused with an official exchange rate.
The currency’s weakness reflects pressures that extend beyond the current military confrontation. Iran entered 2026 with persistent inflation, the effects of long-running sanctions, weakened investment, fiscal constraints, and vulnerabilities in its financial system. The International Monetary Fund projects a 5.4 percent contraction in real GDP for 2026 and consumer-price inflation of 68.9 percent (IMF, 2026). The World Bank has also identified damage to infrastructure, disruption of trade routes, transport difficulties, financial restrictions, and exceptionally high uncertainty as additional burdens on the Iranian economy during the conflict (World Bank, n.d.).
Oil revenues are central to the present deterioration because petroleum exports remain one of Iran’s principal sources of foreign-currency earnings. U.S. Central Command began enforcing a blockade against maritime traffic entering or leaving Iranian ports on 13 April 2026. The initial phase ended on 18 June, and enforcement resumed on 14 July (U.S. Central Command, 12 April 2026; U.S. Central Command, 13 July 2026). Independent shipping data reported by Reuters later showed a sustained collapse in new Iranian crude exports through the Strait of Hormuz, reducing a major channel through which Iran acquires foreign currency (Reuters, 1 September 2026).
Financial sanctions operate differently from a blockade, even when their economic effects reinforce one another. On 24 August 2026, the U.S. Department of the Treasury launched Operation Economic Outcast, expanding measures directed at financial channels, revenue sources, foreign facilitators, and mechanisms used to evade existing restrictions (U.S. Department of the Treasury, 24 August 2026). Such measures can constrain Iran’s ability not only to earn foreign revenue but also to receive, transfer, convert, and use funds through international financial channels.
International law does not treat these instruments as a single category. The United Nations Charter distinguishes, within the Security Council’s Chapter VII powers, between measures not involving armed force under Article 41 and military action under Article 42, which expressly includes blockade (United Nations, 1945). That distinction does not itself determine the legality of unilateral U.S. sanctions, which must be assessed under the international obligations applicable to the particular measures.
A naval blockade raises a different set of legal questions because it is enforced through military force. Its legality must be assessed under the law governing the resort to force and, where it forms part of an armed conflict, under the rules governing naval hostilities. The San Remo Manual on International Law Applicable to Armed Conflicts at Sea is not a treaty, but it provides an influential expert restatement of much of the law applicable to armed conflict at sea, including rules specifically addressing blockade (San Remo Manual, 1994).
The self-defense issue is especially significant. In Oil Platforms (Iran v United States), the International Court of Justice considered U.S. military action against Iranian oil installations within the framework of the 1955 Treaty of Amity and the international law of self-defense. The Court required the United States to establish attacks attributable to Iran that could qualify as armed attacks and to show that its response satisfied the requirements of necessity and proportionality (ICJ, 2003). That judgment concerned events in 1987 and 1988 and does not determine the legality of the present blockade, but its reasoning remains directly relevant to the legal standards governing any current claim of self-defense.
The present collapse of the Iranian rial is best understood as an acceleration of an older crisis. Inflation, structural economic weakness, and long-standing sanctions had already placed the currency under severe strain before the war. The subsequent loss of oil-export capacity, the blockade, tighter financial restrictions, and increased demand for foreign currency have added further pressure. The economic question is how these measures restrict Iran’s access to foreign exchange; the legal question is whether the methods used to impose that pressure comply with the distinct rules governing sanctions, the use of force, and naval hostilities.
1. Why Iran’s Currency Was Already Falling
The rial was already in severe decline before the war began on 28 February 2026 and before the United States imposed its naval blockade in April. By 27 January, the market rate had fallen to roughly 1.5 million rials to the U.S. dollar, then a record low. Reuters also linked the deterioration in the currency to protests that had begun in Tehran’s Grand Bazaar on 28 December 2025 before spreading more widely (Reuters, 27 January 2026). The chronology rules out a simple claim that the blockade caused the currency crisis.
Iran’s exchange-rate system requires careful terminology. For years, the government has maintained preferential or administratively allocated foreign exchange for selected transactions alongside a parallel market in which the rial trades at substantially different rates. World Bank analysis has documented this differentiated system and the importance of the parallel rate as an indicator of market supply, demand, and expectations (World Bank, 2024). In early 2026, the government was also changing parts of the preferential-currency system as it restructured subsidies for imported goods (Reuters, 27 January 2026).
The figures most frequently reported in international coverage are usually market quotations rather than a single official rate applicable across the Iranian economy. For households and firms seeking foreign currency outside preferential channels, that market price can give a clearer indication of scarcity and confidence in the rial. It is also highly sensitive to political risk, inflation expectations, and changes in the availability of foreign currency.
High inflation long predated the blockade. By January 2026, Reuters reported that the Statistical Center of Iran was recording year-on-year inflation of about 60 percent (Reuters, 27 January 2026). Earlier World Bank assessments had already identified persistent inflation, fiscal pressures, financial-sector vulnerabilities, and the costs associated with subsidy and preferential-exchange arrangements as important weaknesses in the Iranian economy (World Bank, 2024).
Sanctions had also altered Iran’s access to international payments well before the present conflict. World Bank reporting describes an economy that increasingly relied on neighboring states, China, exchange houses, bilateral arrangements, barter, and other indirect mechanisms as conventional financial channels became more difficult to use (World Bank, n.d.). Such arrangements allowed trade to continue, but they did not eliminate Iran’s exposure to shortages of widely accepted foreign currency or the additional costs created by financial isolation.
Structural pressures extended beyond sanctions. The World Bank has identified weak investment, water and energy shortages, fiscal strain, and vulnerabilities in the financial system among the persistent constraints on Iranian growth (World Bank, n.d.). By the beginning of 2026, the rial was consequently responding to an accumulation of inflationary, fiscal, financial, and political pressures. The war and blockade entered an existing currency crisis and subsequently intensified several of its most damaging mechanisms.
2. Oil Revenue, Foreign Currency, and the Rial
Oil remains one of Iran’s principal sources of foreign-currency earnings. Although the Iranian economy is not dependent on petroleum alone, oil continues to matter for external receipts and public revenue (World Bank, n.d.). When crude exports decline sharply, Iran loses part of the stream of foreign currency that can be used to pay for imports and other international transactions.
The connection between an oil sale and usable foreign exchange is not automatic. Sanctions and financial restrictions can require transactions to pass through exchange houses, intermediaries, alternative settlement systems, barter arrangements, or other indirect channels documented in World Bank and U.S. sanctions material. A barrel of oil sold abroad does not necessarily produce funds that can immediately be transferred, converted, or spent wherever an Iranian purchaser needs them.
Lower external receipts can place direct pressure on the exchange rate. Importers require foreign currency to purchase goods, machinery, industrial inputs, medicines, and other products from abroad. If the supply of usable foreign exchange contracts while demand remains strong, more rials are required to obtain each unit of hard currency. Depreciation then raises the rial cost of imported products and inputs, adding to domestic inflationary pressure.
The process can become self-reinforcing. Reuters reported in October that Iranians were shifting savings into foreign currencies and gold as the rial reached new lows (Reuters, 3 October 2026). Rising demand for such assets increases pressure on the foreign-exchange market at the same time that export receipts are being constrained. Expectations of further depreciation can consequently contribute to the depreciation they are intended to hedge against.
Oil revenue should not be treated as a complete explanation of the rial’s collapse. Inflation, fiscal conditions, monetary policy, sanctions predating the war, political risk, conflict damage, and expectations all affect the value of the currency. The oil channel is significant because it links the maritime conflict directly to Iran’s ability to obtain foreign exchange, not because it displaces the deeper economic weaknesses that were already visible before 2026.
3. The U.S. Naval Blockade and Iran's Oil Exports
U.S. Central Command announced on 12 April 2026 that American forces would begin enforcing a blockade against maritime traffic entering or leaving Iranian ports the following day. CENTCOM stated that the measure would apply to vessels of all nationalities entering or departing Iranian ports and coastal areas. It also said that vessels merely transiting the Strait of Hormuz to or from non-Iranian ports would not be impeded on that basis (U.S. Central Command, 12 April 2026).
The first phase operated from 13 April until 18 June. CENTCOM later stated that U.S. forces had redirected more than 140 vessels, disabled nine vessels described as non-compliant, and permitted more than 50 commercial vessels supporting humanitarian aid to pass during that period. The blockade was resumed on 14 July (U.S. Central Command, 13 July 2026). Those operational figures are official U.S. accounts and should not be treated as independent assessments of every interdiction.
Shipping data provide stronger evidence of the economic effect. Reuters reported that Iranian crude and condensate loadings fell to approximately 220,000–255,000 barrels per day in August, compared with about 740,000 barrels per day in July and roughly 2 million barrels per day in March (Reuters, 1 September 2026). The same investigation found that, after the blockade resumed, there had been about seven weeks without meaningful Iranian crude exports through the Strait of Hormuz.
The comparison with previous sanctions is important but should remain narrow. Iran had continued exporting substantial quantities of crude despite earlier U.S. sanctions by using sanctions-evasion and shadow-shipping networks. Reuters found that the resumed blockade reduced seaborne crude flows to levels that earlier financial pressure had not maintained for a comparable period (Reuters, 1 September 2026). Physical interdiction thus produced a particularly severe effect on new maritime oil shipments, even though it did not eliminate every means by which existing Iranian oil could be sold.
Inventories already outside Iran complicated the picture. Reuters reported that Iranian crude remained in floating storage and in inventories in Asia after new shipments through Hormuz had fallen sharply (Reuters, 1 September 2026). Those stocks could still reach buyers for a time, even though their depletion could not be offset easily by new seaborne exports. A reduction in new loadings is consequently not the same as an immediate disappearance of all oil sales or oil income.
That distinction is necessary when considering U.S. claims about revenue. On 1 October, the U.S. Department of the Treasury stated that Iranian oil revenues had fallen to zero as the blockade took effect (U.S. Department of the Treasury, 1 October 2026a). The available evidence does not establish that proposition independently. Shortly before his resignation was reported on 4 October, then oil minister Mohsen Paknejad said that oil revenues were still reaching Iran (Reuters, 4 October 2026b). His statement does not by itself establish the precise volume of receipts, but it conflicts with a literal claim that all oil revenue had ceased.
The strongest conclusion supported by the evidence is narrower. New Iranian maritime oil exports through Hormuz were reduced to exceptionally low levels after the blockade resumed, depriving Iran of a substantial source of fresh foreign-currency earnings. Existing inventories and continuing receipts make it impossible, on the present evidence, to equate that collapse in new shipments with the complete elimination of Iranian oil revenue.
3.1 Hormuz Disruption Beyond the U.S. Blockade
The U.S. blockade of Iranian ports is only one source of disruption in the Strait of Hormuz. CENTCOM’s April announcement distinguished ships entering or leaving Iranian ports from vessels transiting the Strait to non-Iranian destinations (U.S. Central Command, 12 April 2026). Iran, however, has also imposed restrictions and threatened wider navigation during the conflict. In July, Iran said that it had stopped two vessels in the Strait; Reuters reported that the incident had not been independently confirmed (Reuters, 31 July 2026). In October, Tehran was still stating that full reopening of the Strait depended on conditions connected with negotiations with Washington (Reuters, 4 October 2026a).
The regional consequences are much larger than Iran’s own exports. The International Energy Agency estimates that about 20 million barrels per day of crude oil and petroleum products passed through Hormuz in 2025, representing roughly one-quarter of global seaborne oil trade (IEA, 2026a). Disruption can arise from restrictions imposed by belligerents, attacks on shipping, security risks, higher insurance costs, or commercial decisions by shipowners to avoid the area.
Regional figures cannot consequently be used as a proxy for Iranian exports. The IEA estimated that flows through Hormuz averaged about 7.6 million barrels per day in August, 13.1 million barrels per day below pre-war levels (IEA, 2026b). That figure covers traffic associated with several Gulf producers and does not isolate the effect of the U.S. blockade on Iran. Iran-specific shipping estimates are required for that purpose, while wider Hormuz data measure the broader disruption to Gulf energy trade.
4. U.S. Sanctions and Access to Foreign Currency
Financial pressure intensified in August 2026 when the U.S. Department of the Treasury launched Operation Economic Outcast. Treasury described the campaign as an effort to target financial channels, revenue networks, foreign facilitators, and sanctions-evasion mechanisms associated with Iranian oil sales and other transactions (U.S. Department of the Treasury, 24 August 2026). The measures were directed not only at the generation of revenue but also at the infrastructure used to move it.
Banking restrictions illustrate the mechanism. On 28 August, the Financial Crimes Enforcement Network proposed a measure that would prohibit U.S. financial institutions from maintaining correspondent accounts for Banque Misr UAE, while the Office of Foreign Assets Control announced related sanctions actions against persons accused of facilitating Iranian financial activity (U.S. Department of the Treasury, 28 August 2026). Because international payments frequently depend on correspondent relationships and access to major clearing systems, restrictions at this level can affect the practical usability of export earnings.
Secondary sanctions extend the pressure beyond Iranian institutions. Treasury has stated that certain transactions involving designated persons or sanctionable Iranian activity may expose foreign financial institutions to restrictions on correspondent or payable-through accounts in the United States (U.S. Department of the Treasury, 10 September 2026). The legal consequences depend on the applicable sanctions authority, the parties involved, and the nature of the transaction. It would be inaccurate to suggest that every Iran-related transaction by a non-U.S. institution creates the same exposure.
Iran has responded through alternative financial structures. On 1 October, Treasury and FinCEN stated that the A7 Network and associated entities had created payment pathways used by Iranian actors, including the Central Bank of Iran and the Islamic Revolutionary Guard Corps, and had facilitated transactions linked to oil sales and procurement (U.S. Department of the Treasury, 1 October 2026b). These were administrative assertions made in the course of U.S. sanctions and regulatory action, not judicial determinations.
For the currency crisis, the distinction between earning money and being able to use it is central. Foreign-exchange revenue has limited economic value if it cannot readily be transferred, converted, cleared through banks, or deployed to pay an overseas supplier. Measures targeting correspondent banking, exchange houses, intermediaries, and alternative payment networks can obstruct different stages of that process even when an underlying commercial sale has already occurred.
The blockade and sanctions thus operate at different points in the same economic chain. The blockade can reduce the amount of new oil leaving Iranian ports, while financial restrictions can narrow the channels through which revenue from oil and other trade is received and mobilized. For a country already facing strong demand for foreign currency and a rapidly depreciating rial, pressure on both the quantity of external earnings and their usability can deepen an existing exchange-rate crisis.
5. Sanctions and Blockade Under Different Legal Regimes
The economic interaction between U.S. sanctions and the naval blockade can obscure a basic legal distinction. Both measures can reduce Iran’s access to foreign currency, but they operate through different means. Economic sanctions ordinarily restrict transactions, assets, financial relationships, market access, or dealings with designated persons and sectors without themselves employing armed force. A naval blockade is enforced through military power against maritime traffic and may involve interception, diversion, capture, and, within narrower legal limits, the use of force against vessels.
The United Nations Charter reflects this distinction within the collective-security powers of the Security Council. Article 41 authorizes measures not involving armed force and expressly contemplates the interruption of economic relations. Article 42 addresses military enforcement when Article 41 measures would be inadequate or have proved inadequate and specifically lists blockade among possible operations (United Nations, 1945). These provisions classify forms of Security Council enforcement; they do not transform unilateral U.S. sanctions into Article 41 measures or supply the legal basis for them.
The two forms of pressure consequently require separate legal analysis even when their economic effects converge. Particular U.S. sanctions must be assessed against the international obligations relevant to the measure concerned, including applicable treaty commitments, rules on jurisdiction, non-intervention, and state responsibility where those rules are engaged. The blockade presents a different question because military force is used to restrict maritime access to Iranian territory. Its legality depends first on the law governing resort to force and separately on the international law applicable to naval hostilities.
6. Can the Blockade Be Justified Under Article 51?
Article 2(4) of the UN Charter prohibits states from threatening or using force against the territorial integrity or political independence of another state, or otherwise inconsistently with the purposes of the United Nations. Article 51 preserves the inherent right of individual or collective self-defense if an armed attack occurs. The International Court of Justice has treated necessity and proportionality as customary requirements of lawful self-defense in addition to the conditions stated in Article 51 (United Nations, 1945; ICJ, 1986; ICJ, 2003).
A blockade of another state’s ports by armed forces falls within the category of military conduct contemplated by the international law on aggression. Article 3(c) of the General Assembly’s 1974 Definition of Aggression lists the blockade of the ports or coasts of a state by the armed forces of another state among the acts covered by the Definition (United Nations General Assembly, 1974). Resolution 3314 is not a treaty, however, and the inclusion of blockade in Article 3 does not make every blockade conclusively unlawful without regard to the wider legal circumstances.
That qualification is essential because force that would otherwise fall within Article 2(4) may be justified if the conditions of self-defense are satisfied. The military character of the U.S. blockade is clear; its legal justification is not resolved simply by identifying the measure as a blockade. The relevant questions include the armed attack relied upon, the relationship between that attack and the state against which force is used, and whether the particular defensive measure remains necessary and proportionate.
The United States formally invoked Article 51 in a letter to the Security Council dated 10 March 2026, reporting that U.S. combat operations against Iran had commenced on 28 February in the exercise of self-defense (United States, 10 March 2026, S/2026/161). Iran adopted the opposite position in its communication of 28 February, characterizing the U.S. and Israeli attacks as aggression contrary to Article 2(4) and invoking Iran’s own right of self-defense under Article 51 (Iran, 28 February 2026, S/2026/106). These communications establish the parties’ legal claims, not the validity of either claim.
The timing of the blockade complicates the analysis. The U.S. Executive Office of the President later stated that the hostilities beginning on 28 February had terminated with the ceasefire ordered on 7 April (Executive Office of the President, 16 June 2026). CENTCOM announced the blockade on 12 April for enforcement beginning on 13 April. A ceasefire does not by itself determine that any later use of force is unlawful, but the sequence prevents the blockade from being treated without further analysis as merely an uninterrupted continuation of the operations reported to the Security Council in March.
The temporal question must therefore be addressed as part of necessity. A legal justification for the April blockade would require a sufficient basis for continuing or renewed reliance on self-defense after the ceasefire, assessed against the circumstances then prevailing. The March Article 51 letter predates the blockade and does not, on its face, report that later measure. Article 51 also requires measures taken in self-defense to be reported immediately to the Security Council, so notification of the February operations and the legal basis for the later blockade should not simply be treated as the same question. Iran separately protested the blockade in a 13 April communication to the Council (Iran, 13 April 2026, S/2026/323).
6.1 Necessity, Proportionality, and Oil Platforms
Oil Platforms (Iran v United States) provides a particularly relevant framework because the International Court of Justice had to assess earlier U.S. uses of force against Iran in a maritime setting. The 2003 judgment concerned attacks on Iranian offshore oil installations in 1987 and 1988. Jurisdiction arose under the 1955 Treaty of Amity, but the Court interpreted the treaty’s essential-security provision in light of the international law governing self-defense (ICJ, 2003).
The United States had to establish attacks attributable to Iran that could qualify as armed attacks and then satisfy the requirements of necessity and proportionality. The Court was not persuaded that the factual and legal basis for the claimed self-defense had been established. Its treatment of proportionality was more differentiated than a simple rejection of both episodes on identical grounds.
For the October 1987 attack, the Court stated that the U.S. action might have been proportionate had it first been shown to be necessary in response to an Iranian armed attack. Necessity had not been established. The April 1988 operations raised a separate proportionality problem: the Court considered the attacks on the Salman and Nasr platforms within the much larger Operation Praying Mantis and concluded that the scale of the overall response could not be regarded as proportionate in the circumstances (ICJ, 2003).
The judgment does not predetermine the legality of the 2026 blockade. The underlying attacks, available evidence, military objectives, and operational circumstances are different. Its importance lies in the discipline it imposes on the analysis. Invocation of Article 51 does not dispense with proof of the relevant armed attack, the necessary connection to the state against which force is directed, and compliance with necessity and proportionality.
Necessity also has a temporal dimension when a military measure continues over time. The factual conditions supporting a defensive response must be assessed in light of circumstances during enforcement rather than assumed to remain unchanged because self-defense was validly or purportedly invoked at an earlier stage. The April ceasefire and subsequent commencement of the blockade make that inquiry particularly important here.
Proportionality under jus ad bellum should also be kept distinct from proportionality in the conduct of hostilities. The former concerns the scale and character of defensive force in relation to the armed attack and the legitimate defensive purpose. The latter can require comparison between expected incidental civilian harm and anticipated military advantage in particular operations. A measure may raise different questions under each body of law.
7. The International Law of Naval Blockade
The legality of resorting to a blockade does not exhaust the legal inquiry. Once a blockade is conducted during an armed conflict, the rules governing naval hostilities regulate how it may be established and enforced. Modern naval warfare is not governed by a single comprehensive treaty codifying every aspect of blockade, which makes customary international law and authoritative restatements especially important.
The San Remo Manual on International Law Applicable to Armed Conflicts at Sea, adopted in 1994 following expert meetings convened by the International Institute of Humanitarian Law, is the principal modern restatement. It is not a treaty and does not create binding law by its own force. Its individual provisions must be evaluated according to their basis in treaty law, customary international law, and state practice rather than treated as binding simply because they appear in the Manual (San Remo Manual, 1994).
Additional Protocol I to the Geneva Conventions requires similar care. Iran and the United States both signed the Protocol on 12 December 1977, but neither has ratified it. They are not parties to Additional Protocol I and cannot be treated as bound by all of its provisions as treaty obligations merely because they signed it (ICRC, n.d.). Particular rules reflected in the Protocol may nevertheless bind them independently where those rules form part of customary international law.
That distinction is important throughout the blockade analysis. Treaty status, customary status, and the persuasive authority of the San Remo Manual are separate questions. Similar wording across those sources does not eliminate the need to identify the legal basis on which a particular obligation is said to bind the parties.
7.1 Effectiveness, Notification, and Neutral Shipping
The San Remo Manual identifies declaration, notification, and effectiveness as basic requirements of blockade. Paragraphs 93 and 94 provide for declaration and notification and address matters including commencement, duration, location, extent, and the period during which neutral vessels may leave the blockaded coastline. Paragraph 95 requires a blockade to be effective as a matter of fact. Paragraphs 99 and 100 protect access to neutral ports and coasts and require impartial application to vessels of all states (San Remo Manual, 1994).
CENTCOM’s April announcement publicly identified the commencement of the U.S. blockade, its general geographical scope, and its application to vessels regardless of nationality. When enforcement resumed in July, CENTCOM again directed mariners to official Notices to Mariners for operational information (U.S. Central Command, 12 April 2026; U.S. Central Command, 13 July 2026). Those statements provide evidence relevant to declaration and notice, but they do not by themselves establish that every requirement identified in the San Remo Manual was satisfied.
Effectiveness is less difficult to establish factually. Iranian maritime oil exports fell sharply after enforcement resumed, while CENTCOM reported numerous diversions and interdictions. Those facts show that the blockade was capable of having practical effects on access to Iranian ports. Effectiveness in this sense is only one condition, however; it does not establish the legality of particular enforcement actions or cure defects under other applicable rules.
Merchant vessels suspected of blockade-running present a separate question. Paragraph 98 of the San Remo Manual provides that a merchant vessel reasonably believed to be breaching a blockade may be captured. Attack is subject to a narrower formulation: after prior warning, a merchant vessel that clearly resists capture may be attacked (San Remo Manual, 1994). The rule distinguishes an attempted breach from conduct that may justify the use of force against the vessel itself.
The M/T Belma incident illustrates the evidentiary problem. CENTCOM stated that on 15 July the Curaçao-flagged, unladen tanker was traveling toward Kharg Island, had received repeated warnings, and was disabled after a U.S. aircraft fired missiles into its smokestack (U.S. Central Command, 15 July 2026). That establishes the official U.S. account of the encounter. It does not, without additional evidence, establish whether an attempt at capture occurred, what conduct amounted to resistance to capture, or whether the conditions reflected in paragraph 98 were fulfilled.
7.2 Humanitarian Limits on Blockade Enforcement
Humanitarian limits constrain the use of blockade even when a military purpose exists. Paragraph 102 of the San Remo Manual states that a blockade is prohibited where its sole purpose is starving the civilian population or denying it objects essential for survival. The same paragraph addresses a blockade whose expected damage to civilians is excessive in relation to the concrete and direct military advantage anticipated (San Remo Manual, 1994). Because the Manual is non-binding, those formulations should not be assumed to constitute customary law solely by virtue of their inclusion in its text.
The prohibition on using starvation of civilians as a method of warfare rests on firmer independent customary authority. The ICRC’s study of customary international humanitarian law identifies that prohibition as a customary rule applicable in both international and non-international armed conflicts (ICRC, 2005). The study also identifies a customary obligation to allow and facilitate rapid and unimpeded passage of impartial humanitarian relief for civilians in need, subject to the parties’ right of control.
The San Remo Manual gives more specific expression to those concerns in the context of blockade. Paragraph 103 addresses the passage of food and other essential supplies where civilians in the blockaded territory are inadequately provided for, subject to arrangements including search and impartial distribution. Paragraph 104 separately concerns medical supplies (San Remo Manual, 1994). These provisions are influential formulations of blockade law, but their precise customary status must be distinguished from the independently established customary prohibition of civilian starvation.
None of these conduct-of-hostilities rules answers the prior Article 51 question. A state entitled to use force in self-defense may still violate international humanitarian law in the manner in which a blockade is enforced. Conversely, compliance with humanitarian rules cannot supply a lawful basis for resorting to force where none otherwise exists. Jus ad bellum and jus in bello remain separate legal inquiries.
8. U.S. Sanctions Under International Law
International law does not support the proposition that unilateral economic sanctions are automatically lawful or automatically unlawful. Their legality depends on the particular conduct restricted, the international obligations binding the sanctioning state, the jurisdictional basis asserted, and any circumstance relied upon to preclude wrongfulness. The label “sanction” cannot substitute for analysis of the specific measure.
The International Court of Justice’s 1986 judgment in Military and Paramilitary Activities in and against Nicaragua illustrates the point. Nicaragua challenged measures including the suspension of economic aid, a severe reduction in its sugar import quota, and a general trade embargo. The Court did not regard the economic measures before it as violations of the customary international law principle of non-intervention (ICJ, 1986). The judgment consequently cannot support a general rule that economic pressure alone necessarily constitutes unlawful intervention.
The treaty question produced a different conclusion. The Court found that the general trade embargo breached Article XIX of the 1956 Treaty of Friendship, Commerce and Navigation between Nicaragua and the United States and was not justified under the treaty provision on essential security in the circumstances before it (ICJ, 1986). The same economic measure could thus fail under a specific treaty obligation even though the customary non-intervention claim did not succeed.
The law of state responsibility adds a further distinction between retorsion and countermeasures. Retorsion consists of unfriendly conduct that does not breach an international obligation owed by the acting state. Countermeasures involve the temporary non-performance of an obligation that would otherwise apply and are subject to legal conditions. The International Law Commission’s 2001 Articles on Responsibility of States for Internationally Wrongful Acts are not a treaty, although individual provisions may reflect customary international law (ILC, 2001).
Articles 49–53 principally regulate countermeasures taken by an injured state. They require a prior internationally wrongful act, limit countermeasures to the purpose of inducing compliance, preserve specified categories of obligations, impose proportionality requirements, and establish procedural conditions (ILC, 2001). It would consequently be insufficient to describe the present U.S. sanctions as lawful countermeasures merely because the United States alleges internationally wrongful conduct by Iran.
That conclusion requires one qualification. Article 54 provides that the countermeasures chapter does not prejudice the right of certain states other than an injured state, where they are entitled under Article 48 to invoke responsibility, to take lawful measures in the collective interest. The ILC commentary deliberately did not settle a comprehensive regime for countermeasures by non-injured states because the relevant practice was considered insufficiently developed (ILC, 2001). The status of such measures cannot be reduced either to an unrestricted right of collective countermeasures or to a categorical prohibition.
Secondary sanctions present an additional problem because they seek to influence conduct by third-country companies and financial institutions, including conduct occurring outside U.S. territory. Domestic U.S. law may establish the sanctions exposure asserted by Treasury without resolving every question that may arise under international rules on jurisdiction or under applicable treaties. Those questions depend on the particular measure and asserted jurisdictional connection; they should not be generalized across the entire Iran sanctions regime.
9. Civilian Effects and Humanitarian Trade
The civilian consequences of the currency and trade crisis are particularly visible in the pharmaceutical sector. The Associated Press reported in September 2026 that Iran manufactures more than 80 percent of its medicines domestically but remains dependent on imported raw materials for many products. Importers described maritime disruption as increasing reliance on more expensive air transport, while depreciation of the rial raised domestic costs (Associated Press, 2026).
U.S. sanctions do not impose a categorical prohibition on humanitarian trade. OFAC maintains exceptions and authorizations covering specified transactions involving agricultural commodities, food, medicine, and medical devices, subject to the conditions and exclusions of the relevant sanctions programs. Its current Iran sanctions materials continue to list General License 8A, which authorizes certain humanitarian trade transactions involving the Central Bank of Iran and the National Iranian Oil Company (OFAC, 2020; OFAC, n.d.).
Formal authorization does not ensure that a permissible transaction can be completed. Financial institutions and commercial firms may decline Iran-related business because of compliance costs, uncertainty about other sanctions restrictions, payment difficulties, or exposure elsewhere in a transaction. The Associated Press has reported that such obstacles affect pharmaceutical trade even where the goods themselves fall within humanitarian exceptions (Associated Press, 2026). Maritime disruption adds a separate problem by increasing the cost and difficulty of physical delivery.
Human-rights arguments require additional caution. In General Comment No. 8, the Committee on Economic, Social and Cultural Rights emphasized the effects of sanctions on economic, social, and cultural rights while expressly declining to suggest that sanctions imposed consistently with Chapter VII of the UN Charter or other applicable international law are inherently illegitimate (CESCR, 1997). A General Comment is an interpretation by a treaty-monitoring body, not a binding judicial decision.
The United States signed the International Covenant on Economic, Social and Cultural Rights on 5 October 1977 but, as recorded by the United Nations Treaty Collection in 2026, has not ratified it (United Nations Treaty Collection, 2026). The Covenant therefore cannot simply be invoked as a treaty binding the United States in the same manner as it binds a state party. Broader human-rights arguments would require separate analysis of the relevant legal basis rather than assuming that General Comment No. 8 establishes U.S. treaty obligations.
For the blockade itself, international humanitarian law provides the more immediate framework for assessing restrictions on essential civilian supplies during armed conflict. The customary prohibition on civilian starvation and the rules concerning humanitarian relief bear directly on maritime restrictions affecting food, medicine, and other necessities. That framework does not exclude other applicable human-rights law, but it avoids treating humanitarian exemptions in sanctions law and humanitarian obligations in naval warfare as though they were the same legal regime.
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Conclusion
Iran’s currency collapse cannot be attributed to the 2026 blockade and intensified sanctions alone. The rial had already fallen to extreme levels before the war, against a background of persistent inflation, fiscal and financial weaknesses, long-running sanctions, and declining confidence. The later restrictions increased the pressure: the blockade sharply reduced new maritime oil exports, while financial measures narrowed Iran’s ability to receive and use foreign-currency earnings.
Economic convergence does not produce legal equivalence. Unilateral sanctions must be tested against the particular international obligations applicable to each measure, including treaty rules, jurisdictional questions, non-intervention, and state responsibility where relevant. A naval blockade is a military measure and requires separate analysis under the law governing the resort to force and the law regulating naval hostilities.
The Article 51 question is especially dependent on chronology and evidence. The United States reported its February military operations to the Security Council as self-defense, yet the administration later stated that those hostilities had terminated with the 7 April ceasefire, while the blockade began on 13 April. Determining the blockade’s legality consequently requires more than repeating the original self-defense claim: the legal basis for continuing or renewed force after the ceasefire, together with necessity and proportionality, must be assessed against the circumstances then prevailing.
The evidence supports a clearer conclusion on economic effect than on international legality. The blockade and expanded sanctions have substantially intensified pressure on the Iranian rial by restricting oil-derived foreign-currency earnings and access to financial channels. Whether each measure complies with international law remains dependent on the legal rule invoked, the factual justification for the measure, and, in the case of the blockade, the manner in which military enforcement is carried out.
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