Iran's "hobbled economy" is likely to keep it in the phase of nuclear talks, with the Islamic Republic attempting to draw out concessions from the US, according to a Wall Street Journal report on Sunday.
Young Iranians are "struggling to find work," and "a frustrated middle class" cannot afford to buy imported goods. Iran's currency, the Iranian Rial, is among the weakest in the world, with inflation remaining "well above 30%," WSJ added.
Economists cited by WSJ said data pointed to a "worrying picture, particularly for the rural poor and a shrinking middle class," largely due to the cost of food increasing 41% in March 2025 as compared to March 2024.
The Trump administration's campaign of "maximum pressure" is likely to intensify these trends, as Washington seeks to "force Iran to rein in its nuclear program and prevent it from developing a bomb," according to the report.
Political analysts were cited by the American newspaper as saying that a "further deterioration of Iran's economy could push its people to the brink."
Analysts comment on the pressure of economic sanctions
WSJ cited Sanam Vakil, director of the Middle East and North Africa program at London-based think tank Chatham House, as saying, "This is a country that’s creaking under the pressure of economic sanctions, sustained mismanagement, and corruption. Ultimately, what they seek is durable sanctions relief, and they believe that Donald Trump could perhaps deliver that in a way that the Biden administration couldn’t.”
Gregory Brew, a senior analyst for the Eurasia Group specializing in US-Iran relations, said that sanctions that were imposed in 2018 did not cause a "sudden crash, but a slow strangling of economic activity."
"Iranian consumers accustomed to European goods like cosmetics, clothes, and jewelry – things that symbolized their ascendance to the middle class – have had to adjust their tastes as trade reoriented toward China and Russia," Brew added.
Mostafa Pakzad, an Iranian financial adviser cited by the WSJ, stated that even the traditionally more affluent residents of Tehran "are struggling to cope with rising prices."
Djavad Salehi-Isfahani, an economics professor at Virginia Tech, noted, "Inflation is probably the No. 1 concern of the people right now. It’s very painful for people because there’s a psychological element of working hard, getting a wage, and then going to a store just to see it disappear."
Salehi-Isfahani is "doubtful Tehran will commit to major change" despite the pressure, but is more likely to "give enough to keep talks going and extract small economic concessions from the US while gradually chipping away at its demands."
Bracing for eventual leadership change
Tehran is currently concerned about unrest, the report noted, adding the country was "quietly bracing for an eventual leadership change" given Supreme Leader Ali Khamenei's age and his previous illnesses.
The 2024 election of President Masoud Pezeshkian "signaled that Iran's security establishment was open to some degree of change," according to WSJ.
The report cited Jon Alterman, the director of the Middle East program at Washington-based think tank the Center for Strategic and International Studies, as saying, "This was the Pezeshkian bet, and that of the people who allowed him to run and to win, that if they don’t allow reform, the consequence will be revolution."
"There is a very visible class of Iranians who are tied to the power structure who drive expensive sports cars, and they’re billionaires," Alterman added. "Most of the rest of the country is growing gradually more impoverished, but they see that the children of senior government officials live unthinkably luxurious lives."
US-Iran talks
The US and Iran concluded a first round of indirect talks in Oman on Saturday, according to Iranian state media, with the two sides agreeing to continue discussions this week.
US President Donald Trump is seeking to limit Iran's uranium enrichment to 3.67%, White House special envoy to the Middle East Steve Witkoff told Fox News on Monday night.
Trump told reporters on Monday that Iran “has to get rid of the concept of a nuclear weapon. They cannot have a nuclear weapon.”
The US president said on Sunday that he expected to make a decision on Iran very quickly, after both countries said they held "positive" and "constructive" talks in Oman on Saturday and agreed to reconvene this week.
Amichai Stein and Reuters contributed to this report.