Iranian leaders are acknowledging the economic toll of war with the U.S., with the supreme leader urging the government to ​address the hardship and the president saying foreign trade has shrunk by a third due to the American sanctions and blockade.

Yet Tehran signalled no retreat on Saturday, ‌vowing to withstand U.S. pressure, pursue diplomacy and maintain what it said was control over the Strait of Hormuz, the strategic waterway giving Iran leverage through its ability to disrupt global energy markets, Reuters reported.

The government said in a statement on state media that addressing economic pressures caused by sanctions and war was a central focus, including curbing inflation, managing markets, creating jobs, directing investment towards domestic production and gradually reducing dependence on the dollar.

Six months after the U.S. and ​Israel launched the war, negotiations are at an impasse and President Donald Trump’s administration has stepped up efforts to punish Iran financially with what it has billed as an “economic D-Day”.

SANCTIONS ​COMPOUND TOLL ON IRAN’S ECONOMY

Washington has warned countries to cut business ties with Iran or face secondary sanctions, though the Treasury Department stopped short of imposing ⁠penalties against major Iranian trade partners such as China and India, which could have repercussions for the U.S. and global economies.

The Treasury imposed sanctions on Egypt’s Banque Misr for doing business with Tehran, proposing ​a rule that would cut off the bank’s branches in the United Arab Emirates from dollar transactions.

Egypt’s central bank said it and the foreign ministry were in contact with U.S. officials concerning the matter, ​adding the measure was limited to Banque Misr UAE’s U.S. dollar transactions with correspondent banks only.

Banque Misr said on Saturday it was reviewing the U.S. Treasury notice, adding that its branch in the UAE continued to provide banking services to its customers.

The U.S. has also issued sanctions targeting an entity based in Hong Kong and a person linked to Iran’s Bank Melli, according to a notice on the Treasury website.

The sanctions drive compounds the toll of ​the war on Iran’s economy, where annual inflation hit 66% last month.

Supreme Leader Ayatollah Mojtaba Khamenei — who has not been seen publicly since he was injured in the initial February 28 attack that killed his ​father and former Supreme Leader, Ayatollah 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,” he said, according to a written statement attributed to Khamenei.

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

But he said Iran was able to sell about 90 million barrels of oil during the short-lived memorandum of understanding that the U.S. and Iran signed in June, when Washington permitted Iranian oil sales.

Later on Saturday, Pezeshkian called on state TV for a revival of the interim deal, which was signed on June 17 but quickly unravelled amid disagreements over what had been agreed, especially ​on the status of the Strait of Hormuz.

“We ​can solve our problems and gain our ⁠privileges with the memorandum of understanding,” he said of a document that had offered Iran, among other things, immediate relief from U.S. sanctions and the release of its frozen assets.

IRAN VOWS TO PURSUE DIPLOMACY AND DEFENCE

With the U.S. 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 Araqchi on Friday described the talks with Al Thani as “creative”.

In Saturday’s statement, Iran said diplomacy and defence were “two complementary, coordinated and inseparable wings” for protecting the country’s national interests, security and territorial integrity. It said it would pursue both tracks in a balanced manner.

Qatar, a U.S. ally and Gulf neighbour to Iran, ⁠and Pakistan helped ​broker the June memorandum of understanding.

Before the war, the Strait of Hormuz carried 20% of the world’s oil and LNG. ​U.S. military commanders say American forces have cleared sea mines from the strait that had been laid months ago by Iran’s Islamic Revolutionary Guard Corps.

Trump has repeatedly said the strait is open, but the Revolutionary Guards’ navy said in a statement ​that such claims “are an obvious lie”, reiterating that the waterway remained closed to ships without Iranian permission.

Iran is ​preparing a list of conditions for reopening the Strait ‌of Hormuz after mediators asked Tehran to set them out, said Mohsen Rezaei, secretary of Iran’s Supreme National Security Council, adding that ​ending the regional war was among them.

Rezaei said ​Iran had agreed with Oman on a shipping corridor ⁠through the strait, with parts of the route in ​Omani waters and parts in Iranian waters. Ships would use ​a designated central channel if the U.S. met Iran’s conditions, he said through an interpreter in an Al Manar TV interview.

On Wednesday, a ​senior source said Iran and Oman were still working ​on details of an agreement on the waterway after Iran’s Revolutionary Guards ‌said ⁠the two countries had agreed on how to share control of the strait and its revenues.

A Guards spokesperson said Iran would not allow the strait to reopen unless Washington ​lifted what Tehran ​describes as ⁠a blockade of Iranian ports while also paying compensation and removing sanctions.

Before the war began ​in February, the strait carried roughly one-fifth ​of global ⁠oil and liquefied natural gas shipments. Shipping through the waterway has largely stopped since then. Ceasefire agreements announced by Washington ⁠and Tehran ​in April and June were intended ​to restore maritime traffic, but did not hold.

Qatar’s prime minister will visit Tehran on Thursday in an effort to relaunch diplomacy after the U.S. and Iran traded recriminations over Washington’s promise to increase economic pressure on Tehran by targeting its trade partners for sanctions, Reuters reported.

Qatar, a Gulf neighbour of Iran and a US ally, has served as a back-channel negotiator for the warring parties and played a direct role in securing the June ceasefire that briefly led to a cessation of hostilities.

The visit comes as the war nears its sixth month with fighting largely paused but no diplomatic breakthrough in sight. The two sides remain at odds over control of the Strait of Hormuz, a chokepoint for global oil supplies that Tehran has used as leverage.

The memorandum of understanding broke down in part because of differences over the narrow waterway between Iran and Oman where one-fifth of the ⁠world’s oil supplies passed before the war began on February 28.

The guns have gone mostly silent — the US military’s Central Command has not reported any attacks on Iran for nearly a month. Washington appears to be leaning more on economic pressure by announcing plans to cut Iran off from its trading partners with increased sanctions.

Hormuz oil flows have fallen to a three-month low, with just 5 million barrels per day transiting on Monday, according to the latest ship-tracking data. Before the war, the strait carried roughly 20 million barrels per day of crude oil.

Iran’s Revolutionary Guards said on Wednesday that Iran and Oman had agreed how to share the waterway and its revenues, but a senior Iranian source later said the two countries were still working on the details of an agreement.

Despite an aerial bombardment earlier in the war that severely diminished Iran’s conventional forces, Tehran has maintained enough missile and drone capability to attack Gulf neighbours that house US military bases and disrupt oil tankers in the strait, read the report.

The U.N.’s International Maritime Organization has reported 70 incidents in the Strait of Hormuz since February 28 that have killed 19 seafarers.

Thousands of others ⁠have died, mostly in Iran and Lebanon, since the US and Israel attacked Iran with the stated goals of denying Iran a nuclear weapon, helping Iranians topple their government, and destroying Iran’s missile programme.

Qatari Prime Minister Sheikh Mohammed bin Abdulrahman al-Thani will discuss the continuation of Qatar’s mediation efforts and other developments in the region during his visit to Tehran on Thursday, Iranian Foreign Ministry spokesperson Esmaeil Baghaei said.

Qatar’s Foreign Ministry spokesperson said on X that Sheikh Mohammed would also address freedom of navigation in the Strait of Hormuz and the need to return to the status quo before February 28, while also ⁠discussing with Iranian officials ways to “de-escalate tensions and create the conditions conducive to dialogue.”

The international waterway was open to free navigation before the war, but Iran has since clung to its control of the strait as leverage and a revenue source, seeking to charge ships a commission, which the US has opposed.

“An agreement with Oman over the Strait of Hormuz has not been finalised,” the senior Iranian source told ⁠Reuters, adding that the talks were continuing on the details of an accord.

That seemed to contradict a statement by Brigadier General Hossein Mohebbi, a spokesperson for the Islamic Revolutionary Guard Corps, who said Iran and Oman had “reached results that are acceptable to both sides” on controlling the strait and its revenues, Reuters reported.

Mohebbi said the strait would remain shut unless the US met Tehran’s ⁠conditions under the interim ceasefire, or memorandum of understanding, that the two sides signed in June before it unravelled. Those conditions include an end to the US blockade on Iranian ports, compensation and removal of sanctions.

Iran and Oman have held on-and-off talks for weeks about controlling traffic through the strait. Tehran and Washington have each tried to assert control over the channel, imposing separate blockades.