AI Tsunami Plunges Millions into Unemployment

“Artificial intelligence in the physical world” is displayed on a screen during a conference showcasing advances in autonomous driving technology in California on Dec. 11, 2025. (Reuters)
“Artificial intelligence in the physical world” is displayed on a screen during a conference showcasing advances in autonomous driving technology in California on Dec. 11, 2025. (Reuters)
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AI Tsunami Plunges Millions into Unemployment

“Artificial intelligence in the physical world” is displayed on a screen during a conference showcasing advances in autonomous driving technology in California on Dec. 11, 2025. (Reuters)
“Artificial intelligence in the physical world” is displayed on a screen during a conference showcasing advances in autonomous driving technology in California on Dec. 11, 2025. (Reuters)

The year 2025 brought no respite for Lebanese language editor and proofreader Hamida Al-Shaker. Before the year had run its course, her decades-long professional journey was abruptly cut short.

Nearly 60, Al-Shaker had never used artificial intelligence tools or held a conversation with ChatGPT, as millions now do. She was unaware that the technologies rapidly spreading across mobile phones and computers were already doing her job, faster and more efficiently than any human could.

That quiet technological advance proved devastating. A sweeping transformation in the labor market became a tsunami, pushing Al-Shaker and millions of workers worldwide toward unemployment, sparing no sector and few age groups. The impact has been particularly harsh on employees over 50 who failed to keep pace with the accelerating speed of technological change.

According to the website allaboutai, the adoption of artificial intelligence has already contributed to the loss of around 14 million jobs globally. And the wave is far from over. As many as 92 million jobs could disappear worldwide over the next five years.

At its core, artificial intelligence enables computer systems to mimic human thinking, make decisions, and execute complex tasks, from planning to practical application, particularly in editorial and knowledge-based work.

Shock and an uncertain future

Al-Shaker was unaware of this reality, a fact that led to a shock, followed by another, during 2025, which saw the widest spread yet of AI applications. The first shock came when she received a call from the human resources department informing her that her salary would be cut by 50 percent due to “financial difficulties facing the company.” Less than five months later, a second call informed her that she was being laid off, without explanation.

According to Al-Shaker, citing her department head, she was not alone. Half of the team lost their jobs due to the impact of artificial intelligence on client contracts, as companies increasingly turned to AI to draft their news, statements, and reports, either for free or at minimal monthly subscription costs, compared with the sums they previously paid to public relations and advertising agencies.

In this context, economic analyses published by Reuters indicate that annual subscriptions to advanced AI tools, even at the enterprise level, often do not exceed the cost of paying a single employee’s salary for a limited number of months. From a purely managerial perspective, this makes such decisions easy to justify financially.

As a result, Al-Shaker and her colleagues became just another figure in a cold equation. Companies boost profits and cut production costs, while growing numbers of workers are pushed out of the labor market, not because they lack competence, but because algorithms are cheaper than people.

Most affected sectors

Al-Shaker’s story is not an isolated case. It is part of a growing global phenomenon affecting workers across multiple sectors. Specialized reports indicate that jobs based on routine tasks or repetitive data processing are most vulnerable, as automation and generative AI tools expand. Among the most affected sectors are:

Customer service and call centers, where intelligent chat systems and text and voice analysis tools can now handle user inquiries with high efficiency, according to TechRT.

Data and administrative support tasks, such as data entry, file classification, and secretarial work, are being replaced by advanced automation tools, according to Complete AI Training.

Retail and supply chains, where self-checkout systems, smart warehouses, and inventory automation have reduced the need for cashiers and traditional warehouse workers, according to Pleeq Software and ninjatech.blog.

Manufacturing and production, where the spread of robots and automated control systems has intensified the impact of AI on manual labor jobs, according to All About AI.

Accounting and financial operations, where demand for basic roles has declined due to reliance on intelligent financial software capable of handling bookkeeping and routine processes, according to Complete AI Training.

Content creation and media, which have not been spared, are now threatened as AI is capable of writing, summarizing, and rewriting content, posing a challenge to a range of basic writing tasks.

Many workers who lost their jobs do not realize that they are victims of the so-called Fourth Industrial Revolution, which Klaus Schwab, founder and executive chairman of the World Economic Forum at the time, warned about years earlier.

Speaking at the World Government Summit in Dubai in 2016, Schwab said the world was “on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another.”

He added that the scale, scope, and complexity of the changes would be unprecedented, and that while their exact shape remained unclear, the response would have to be integrated and comprehensive across the public and private sectors, academia, and civil society.

Market demands and human skills

Much of what Schwab predicted has now come to pass, particularly in recent months, as companies worldwide accelerate their adoption of AI tools. Experience alone is no longer enough to remain competitive in the labor market. Traditional jobs are changing rapidly, and the required human skills have become more specialized and complex, with greater emphasis on working alongside intelligent systems and turning information into added value.

Professionals who understand how to integrate AI tools into their daily work without sacrificing quality or analytical depth are increasingly in demand, according to Maziad Hijaz‏, Editor-in-Chief at Hewar Group‏ in Riyadh.

Hijaz told Asharq Al-Awsat that artificial intelligence has become an essential part of daily work in terms of speed and volume, while review, editing, and analysis remain entirely human responsibilities to ensure quality.

He added that the sector now requires new skills, and those who fail to adapt will be left behind. These include utilizing AI tools for writing and analysis, developing data literacy, employing predictive analysis, and transforming information into compelling narratives. Combining human skills with AI tools is what ensures excellence.

Firas Barakat, a strategic communications expert in Saudi Arabia, said AI represents a pivotal turning point in labor markets, enhancing efficiency while reshaping the nature of jobs and required skills.

Speaking to Asharq Al-Awsat, Barakat said AI has undoubtedly caused the loss of traditional roles involving routine tasks, but at the same time, it is a major engine for generating new jobs in advanced fields such as data analysis, cybersecurity, smart systems management, and digital solutions engineering, roles that did not exist just a few years ago.

History repeats itself

Technology expert Hassan Yahya, based in the United States, offered a historical perspective. He said this is not the first time the world has been stunned by technological advances, noting that similar fears over job losses have accompanied every major innovation.

He pointed to 1959, when General Motors introduced the industrial robot Unimate, triggering widespread warnings about threats to employment.

Yahya said that AI is already affecting millions of jobs, with projections from the World Economic Forum indicating that 92 million jobs will disappear over the next five years. However, more than 170 million new jobs are expected to be created, meaning a fundamental transformation of work rather than mass unemployment.

He added that eliminating jobs without replacing them does not serve companies or economies, making the creation of new roles inevitable. However, this requires learning how to work with AI, as ignoring the shift could leave many people outside a rapidly changing labor market.

Cost-cutting and profit maximization

The experiences of employees cannot be separated from a recurring economic equation that is evident in thousands of companies worldwide. Instead of retaining experienced staff with associated salaries, insurance, and end-of-service benefits, many firms are opting to replace them with AI.

A World Economic Forum report found that 41 percent of global companies plan to reduce their workforce by 2030 due to increased reliance on AI and automation.

Hijaz said AI adoption has also reshaped relationships with clients, accelerating work and significantly improving quality. He cited a Deloitte study showing that integrating AI into public relations reduced content production time by 25 to 35 percent while improving accuracy.

A market worth billions

The gains are split between business owners and AI companies, whose financial returns contrast sharply with the reality faced by thousands of displaced workers. In mid-2025, a Reuters report stated that OpenAI, the developer of ChatGPT, had reached annual revenues of around $10 billion by the end of the first half of the year, on track to exceed $12.7 billion by year's end, driven by surging demand for its services.

This growth is not limited to OpenAI. A Forbes report showed that other global technology companies with AI divisions are generating billions of dollars in additional annual revenue, making AI one of the most important profit sources for major tech firms, even as some lay off staff to improve cost efficiency.

Key players

The main players in the sector include OpenAI, best known for ChatGPT and a leader in large language models, with a strategic partnership with Microsoft.

Google DeepMind follows, having developed powerful models such as Gemini and AlphaGo, and leading in scientific, medical, and research-oriented AI.

Microsoft itself has become a global force in AI, investing billions in OpenAI and integrating AI across Windows, Office through Copilot, and Azure AI.

NVIDIA focuses on developing the chips and processors that power AI, while Meta offers open-source models such as LLaMA. Amazon Web Services leads in cloud-based AI, and Anthropic has emerged as a strong competitor in the field of language models.

The global AI market was estimated at around $747.9 billion in 2025 and is projected to grow to $2.74 trillion by 2032, according to AffMaven.

Concerns over consequences

The stark contrast between multibillion-dollar AI revenues and the growing risk facing millions of workers raises a central ethical and economic question. Why do companies benefit from technology to cut costs and boost profits while often postponing or ignoring their social responsibility toward displaced employees?

Economists warn that such savings are frequently achieved without genuine retraining efforts or alternative job creation, deepening global unemployment rather than addressing it.

Islam Al-Shafii, an economist based in New York, cited remarks by US Federal Reserve Chair Jerome Powell on Dec. 20, warning of waves of layoffs linked to AI or companies halting job postings for the same reason.

Al-Shafii said the current fear of AI remains precautionary, as it has not yet fully replaced humans. The real risk, he said, is that work previously requiring five employees can now be done by one person using AI.

He added that while some professions remain relatively safe for now, such as skilled trades, concerns persist over safety and decision-making, with international organizations expressing reservations.

Breaking monopolies

Yahya argued that confronting these changes requires breaking three major monopolies: the monopoly of university degrees in hiring, as companies like Google and Dell focus on skills rather than diplomas; the technological monopoly, as AI empowers individuals to execute ideas without large teams; and the language monopoly, as AI allows interaction in native languages, opening the digital economy to millions.

The digital economy is expected to exceed $24 trillion by 2025, accounting for approximately 21 percent of the global economy and growing faster than traditional sectors.

Capitalism under strain

Al-Shafii warned that advanced capitalist societies, which rely heavily on tax revenues from employees, could face systemic strain if jobs are replaced by AI. Without a sufficient tax base, governments may struggle to fund essential services, which can potentially lead to social instability and collapse.

He noted that business owners who once built factories in East Asia for cheap labor are now returning home to rely on robots for production.

United Nations concern

The issue has also reached the United Nations, particularly at its headquarters in New York. Al-Shafii stated that there is a deep concern over AI, but institutions often focus on gains while overlooking the associated losses.

He noted that AI supports many sustainable development goals and cybersecurity efforts, but its negative aspects, including cyber fraud and surveillance risks, have yet to be fully addressed. UN Secretary-General Antonio Guterres has repeatedly warned against militarizing AI and entrusting humanity’s future to algorithms.

Threat or opportunity?

Concerns over AI extend beyond job losses to issues of transparency and information security. Hijaz said AI requires greater responsibility to ensure accuracy and disclosure.

Asked whether AI is a threat or an opportunity, he said it is an inevitable development that must be harnessed. Like the computer and the internet before it, initial fears will likely give way to empowerment.

He added that creativity remains a uniquely human value that AI cannot replace, and that technology enhances rather than eliminates it.

Not a replacement

Translation professor Mohammed Khair Nadman told Asharq Al-Awsat that AI tools now save around 60 percent of time in translation and writing, supporting but not fully replacing human work. He warned that AI can still make serious errors, making human oversight essential.

M. A. Hadi, MD, Head of the Department of Pathology at a hospital in the United States, said that the current wave of misinformation fueled by easy access to online medical content and artificial intelligence "will not last long if simple regulations are put in place".

He explained that reading medical information online or collecting data through AI does not make someone a physician, just as reading news does not make a journalist, nor learning about car engines makes one a mechanic. "In the same way," he noted, "having extensive legal knowledge through AI does not qualify someone to be accepted in court as a lawyer."

Dr. Hadi added that while such knowledge can empower individuals to ask better and more informed questions, it does not replace professional expertise. "AI can help people engage more effectively with professionals and may even push experts to become more transparent and ethical, reducing the space for fraud, middlemen, and bad practices," he said.

Quoting the Arabic proverb "give your bread to the baker, even if he eats half of it", Dr. Hadi stressed that while the "do-it-yourself" mindset has always existed and can be useful, real work must still be done by qualified experts. "Artificial intelligence will likely make professionals better, as general knowledge continues to expand," he said, "but professional training, experience, and licensing cannot and should not be granted to laypeople, even if they are well-read or AI-assisted."

He warned that partial or incomplete knowledge can be more harmful than helpful when applied in practice, concluding that, ultimately, "the evidence is in the results."

A final attempt

Al-Shaker, living in crisis-hit Lebanon without a private sector pension system, believed her regional company job was secure. After losing it, she tried to catch up, creating a LinkedIn account, registering on job platforms, taking free online courses, and sending dozens of resumes, often receiving automated or no responses.

Her story reflects the dilemma of an entire generation pushed out of the market, not due to lack of competence, but because the rules changed abruptly.

She ended with a bitter question: Nearly two centuries after the Industrial Revolution sparked the call, “Workers of the world, unite,” will there now be a call saying, “Employees of the world, unite?”



Sept. 11’s Legacy Endures a Quarter-Century Later

A Palestinian man holds up a poster of ousted Iraqi leader Saddam Hussein (L) and wanted al-Qaeda leader Osama bin Laden during a demonstration by some 1,000 people in the West Bank town of Hebron 10 April 2004, in support of the Iraqi resistance against the US-led coalition. (AFP via Getty Images)
A Palestinian man holds up a poster of ousted Iraqi leader Saddam Hussein (L) and wanted al-Qaeda leader Osama bin Laden during a demonstration by some 1,000 people in the West Bank town of Hebron 10 April 2004, in support of the Iraqi resistance against the US-led coalition. (AFP via Getty Images)
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Sept. 11’s Legacy Endures a Quarter-Century Later

A Palestinian man holds up a poster of ousted Iraqi leader Saddam Hussein (L) and wanted al-Qaeda leader Osama bin Laden during a demonstration by some 1,000 people in the West Bank town of Hebron 10 April 2004, in support of the Iraqi resistance against the US-led coalition. (AFP via Getty Images)
A Palestinian man holds up a poster of ousted Iraqi leader Saddam Hussein (L) and wanted al-Qaeda leader Osama bin Laden during a demonstration by some 1,000 people in the West Bank town of Hebron 10 April 2004, in support of the Iraqi resistance against the US-led coalition. (AFP via Getty Images)

Rarely does a day deserve to be called “the day that shook the world.” September 11, 2001, claimed that distinction the moment it happened. At first, many could scarcely believe what they were seeing on their screens. The sight of civilian aircraft exploding into symbols of American power and success in New York and Washington was shocking and deadly. A quarter-century later, there is no denying the mark that day left on the US, the Middle East and the world.

The day set in motion by al-Qaeda leader Osama bin Laden brought down two governments: the Taliban in Afghanistan and Saddam Hussein’s government in Iraq. Afghanistan may have returned to life under a diluted form of Taliban rule, but the Middle East is still paying the price for the regional imbalances created when the US military uprooted Iraq’s Baathist government.

The fall of both governments was an enormous, unintended gift to Iran, now engaged in a military conflict with the United States.

The world was not accustomed to seeing the US attacked at home. On December 7, 1941, Japan attacked the US base at Pearl Harbor in Hawaii. Washington declared war on Japan the next day, and the rest is history.

On September 11, bin Laden brought the war onto American soil itself, prompting George W. Bush to launch a war against what he regarded as strongholds of terrorism.

It was no surprise that a wounded America, led by Bush, decided to topple the government of Mullah Mohammed Omar, who insisted on sheltering bin Laden and ignored calls to distance himself from the al-Qaeda leader or hand him over.

But the greater response came in the Middle East. In 2003, the region watched a US armored vehicle pull Saddam Hussein’s statue from its pedestal in Baghdad’s Firdos Square. It would later watch the hangman’s noose tighten around Saddam’s neck, alarming two men: Libya’s Moammar al-Gaddafi and Yemen’s Ali Abdullah Saleh.

Bin Laden deliberately chose mostly Saudis for the team that attacked New York and Washington, hoping to provoke a crisis and rupture relations between Washington and Riyadh. He did not get what he wanted, but the attacks posed a test across the Muslim world.

Many voices in the US called for terrorism to be uprooted at its source. The attacks unsettled the US and the West’s relations with many countries. They also strained relations between Western governments and Arab and Muslim communities, particularly as waves of migration increased. Today, the far-right is on the rise in several parts of Europe.

Yasser Arafat was living in Gaza that day. He was troubled by the attention focused on a few Palestinians in the West Bank and Gaza who handed out sweets to celebrate the attacks and express their anger at American bias toward Israel.

Despite his advanced age, Arafat insisted on donating blood for those wounded in New York and Washington and went to a Gaza hospital. Some say that, in the first hours, he feared Palestinians might have been involved in carrying out the attacks.

Al-Gaddafi was also alarmed, although both he and Saddam initially imagined that the attacks would weaken the US. Al-Gaddafi asked Foreign Minister Abdulrahman Shalgham to arrange for Algerian President Abdelaziz Bouteflika to tell Bush that Libya was ready to normalize relations and open a new chapter with the US.

Bouteflika conveyed the Libyan position, but the US president told his visitor: “Tell al-Gaddafi that he must immediately surrender his nuclear program’s arsenal, or we will go and destroy it ourselves.”

Shalgham, having gauged the tense mood in America, told a meeting in Tripoli that the United States would occupy Afghanistan, Iraq and Libya. The Libyan leader did not hesitate to bow to Bush’s demands.

The US used Iraq’s alleged possession of weapons of mass destruction as a pretext for attacking the country. It also claimed that the Iraqi government had ties to al-Qaeda. Many did not believe the claim, particularly given the stark differences between Saddam and bin Laden and the vastly different ideologies that guided them.

The prevailing impression was that the allegation had been fabricated. In fact, no relationship existed. But Saddam made a serious error in the 1990s, while bin Laden was in Sudan, when he sent a member of Syria’s Muslim Brotherhood to meet him there. The al-Qaeda leader showed no interest in cooperating with what he called the “infidel Baathist regime.”

The Iraqi government tried again, sending an intelligence official named Farouk Hijazi. A meeting with bin Laden was arranged through Sudanese Islamist leader Hassan al-Turabi. After the meeting, which lasted more than three hours, Hijazi returned to Iraq and advised Saddam to abandon the idea of working with bin Laden, who reportedly demanded permission to establish independent camps on Iraqi soil.

The Iraqi government dropped the idea of cooperating with bin Laden. But US intelligence agencies exploited murky threads of contact between the two sides and used them to justify the invasion of Iraq.

The US toppled the Taliban and Saddam’s government and launched a prolonged hunt for al-Qaeda leaders.

On May 2, 2011, bin Laden, hiding in Abbottabad, Pakistan, was taken by surprise when US troops stormed his compound. America exacted revenge on the architect of the attacks on New York and Washington and disposed of his body at sea.

Osama bin Laden was gone, but al-Qaeda’s imprint exacted an enormous price from the countries of the Middle East.


What Options Does Hezbollah Have in Dealing with Israeli Escalation?

Portraits of current and former Iranian and Hezbollah leaders displayed at a rally, in the southern suburbs of Beirut, Lebanon, September 2, 2026. (Reuters)
Portraits of current and former Iranian and Hezbollah leaders displayed at a rally, in the southern suburbs of Beirut, Lebanon, September 2, 2026. (Reuters)
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What Options Does Hezbollah Have in Dealing with Israeli Escalation?

Portraits of current and former Iranian and Hezbollah leaders displayed at a rally, in the southern suburbs of Beirut, Lebanon, September 2, 2026. (Reuters)
Portraits of current and former Iranian and Hezbollah leaders displayed at a rally, in the southern suburbs of Beirut, Lebanon, September 2, 2026. (Reuters)

Hezbollah finds itself facing an increasingly difficult equation as Israeli escalation in South Lebanon has widened in recent days. How will the party respond to mounting Israeli strikes without being drawn into a broader confrontation that Israeli Prime Minister Benjamin Netanyahu may be seeking either to postpone Israel’s elections or improve his prospects in them.

At the same time, Hezbollah is facing growing pressure from its support base, which is bearing the brunt of the strikes and demanding a response capable of deterring Tel Aviv. Yet the group’s options appear largely constrained by regional developments, particularly the course of US-Iran negotiations, as well as domestic political calculations in Lebanon.

A response could benefit Netanyahu

Sources familiar with Hezbollah’s position said the Iran-backed party has largely avoided signaling whether it intends to retaliate or continue exercising restraint and adhering unilaterally to the ceasefire agreement.

They told Asharq Al-Awsat that Hezbollah is currently focusing on holding the Lebanese authorities responsible for addressing the situation, noting that the group had previously called on the government to engage in dialogue over the expanding Israeli offensive and the failure of negotiations.

The sources see no indication so far that Hezbollah may make a military response. They argue that one objective of Israel’s widening offensive is to provoke Hezbollah and Iran into retaliating and trigger a broader war, which could benefit Netanyahu electorally or help him postpone the polls.

Limited ability to confront Israel

Hilal Khashan, a professor of political science at the American University of Beirut, took a different view, saying Hezbollah has no options left because its military power has collapsed, particularly after its decision to hand over Ali al-Taher — “a symbol of its pride” — to Israel rather than surrender it to the Lebanese army.

“Hezbollah lacks the ability not only to fight Israel, but even to provoke it,” Khashan told Asharq Al-Awsat. “It sent two drones, and we saw the results.”

The academic believes the party’s current priority is to retain its weapons domestically after its military role in confronting Israel has effectively ended, although Hezbollah “insists on living in denial.”

He expects Israeli escalation to continue ahead of the heated elections, saying it will not be confined to Lebanon but could extend to the West Bank, Gaza and southern Syria, amid continued threats of strikes against Iran.

“As for America’s ability to pressure Israel, it appears limited,” Khashan noted, saying this means an expansion of Israeli operations into Lebanon's Bekaa Valley cannot be ruled out.

Three options for Hezbollah

Retired Lebanese army Brig. Gen. Mounir Shehadeh offered a different assessment, identifying three options available to Hezbollah.

“The first is a broad, direct military response,” he told Asharq Al-Awsat. “This is the option that could give Israel the pretext it is seeking to expand its target list, take the escalation deeper into Lebanon and perhaps strike Lebanese infrastructure. It is therefore a high-cost option.”

The second is to refrain entirely from responding. That also carries a price because Israel could interpret it as evidence that it can impose new realities without paying a cost, particularly following the escalation over Ali al-Taher and the continuing strikes, he explained.

The third option is a calibrated, limited response. “In my view, this is the most logical option if the group decides to respond,” Shehadeh said.

Such action would seek to establish the principle that “aggression carries a cost” without triggering an all-out confrontation, he went on to say. Hezbollah could simultaneously maintain a policy of ambiguity by declining to claim every operation, particularly if it wanted to preserve room for political maneuver.

Shehadeh said Hezbollah may be facing a more complicated calculation: whether to respond to Israel now or wait until the direction of US-Iran negotiations becomes clearer.

Waiting for the outcome of those talks would not necessarily mean surrendering or remaining passive, he noted. Instead, Hezbollah could defer a major response while keeping the option of limited retaliation open, since a broad confrontation at this stage could benefit Israel more than the party and give it an opportunity to widen the war before the regional picture becomes clearer.

Shehadeh expects Hezbollah to avoid, in the near term, initiating a major response that could trigger an all-out war. At the same time, the group cannot indefinitely tolerate continued Israeli escalation without responding.

He stressed that the most realistic scenario is to contain the escalation, monitor developments on the ground, take into account the US-Iran diplomatic track and keep open the option of a limited, carefully calibrated response if Israel crosses certain lines.


Iran's Hormuz Leverage Wanes as US Economic Squeeze Bites

Vessels in the Strait of Hormuz near the beach of Bandar Abbas, Iran, September 5, 2026. (Reuters)
Vessels in the Strait of Hormuz near the beach of Bandar Abbas, Iran, September 5, 2026. (Reuters)
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Iran's Hormuz Leverage Wanes as US Economic Squeeze Bites

Vessels in the Strait of Hormuz near the beach of Bandar Abbas, Iran, September 5, 2026. (Reuters)
Vessels in the Strait of Hormuz near the beach of Bandar Abbas, Iran, September 5, 2026. (Reuters)

Six months after a conflict that rattled markets and pushed the region to the brink of a wider war, the tide may be turning against Iran as Washington unleashes an unprecedented economic offensive to achieve what military force could not.

After years of surviving sanctions, Tehran is now confronting one of the harshest squeezes in the regime's history, according to Iranian insiders and regional sources cited by Reuters.

A US naval blockade and tougher sanctions are curbing oil exports, ‌restricting access to foreign currency and exposing growing strains in the economy.

The campaign has led US and regional officials to wager that mounting economic pressure can force Tehran to allow free passage through the Strait of Hormuz, which carries about a fifth of global oil and LNG supplies.

Their bet rests on a simple calculation: Iran is suffering more economic damage than it is inflicting. Efforts to choke off oil exports have cut state revenues, while attempts to disrupt shipping through Hormuz have not triggered the global economic shock Tehran hoped would force Washington to compromise. Energy markets have adjusted and alternative supplies have continued to flow.

Whether the pressure will force concessions remains unclear, the regional sources said. Tehran has failed to impose the costs it hoped would break Washington's resolve but has shown little sign of abandoning demands for sanctions relief, access to frozen assets and recognition of its security role in Hormuz.

Still, a new formula for resolving the standoff is now under discussion between mediators and Iran, the sources said.

Can Tehran outlast the squeeze?

Three senior Iranian sources acknowledged that Washington's campaign is becoming increasingly difficult to withstand. The latest measures have sharply restricted Tehran's ability to access foreign currency, import goods and tap global financing networks that have helped keep the economy afloat.

Iranian leaders fear a worsening economy, marked by surging prices, weaker trade and pressure on household incomes, could reignite nationwide unrest that has repeatedly challenged Tehran.

Shortages of key imports, including fuel and wheat, are becoming an increasing concern, officials said.

US Treasury Secretary Scott Bessent described the strategy as a “one-two punch” combining the blockade with “the toughest sanctions in history.”

“It is going to work in Iran and we are going to collapse this regime,” he told CNBC.

For some US, Israeli and regional officials, such ‌strains strengthen ⁠hopes that economic pressure could eventually carry political consequences inside Iran by triggering unrest, widening rifts within the leadership and weakening its grip on power.

Others remain skeptical that economic and military coercion will produce a political rupture, pointing to decades of failed efforts to destabilize the regime and Tehran's willingness to suppress dissent. They argue Iran's rulers may again prove more resilient than their adversaries expect.

Resilience test

Dennis Ross, a former US negotiator, said Washington may be interpreting Iran's economic distress as evidence of strategic success when the reality is more complicated. Tehran remains determined to demonstrate it can control Hormuz, but appears to be calibrating its use of force while keeping further escalation in reserve.

The Revolutionary Guards may believe Iran can absorb the economic pain and outlast the pressure rather than compromise, ⁠Ross said.

“The Iranians have consistently surprised us in terms of their resiliency,” he added, saying he doubted economic and military pressure alone would force a retreat. Hardliners, he said, may believe they can endure and ultimately secure what they want.

Resilience may depend as much on public tolerance as Tehran's ability to absorb economic hardship, said Burcu Ozcelik, a senior research fellow at the Royal United Services Institute.

“Of course, the economic squeeze raises the risk of public unrest, but for now, a wartime mentality appears to have a significant hold ⁠over the population,” said Ozcelik. “Foreign military intervention, civilian casualties and the perception of a wider civilization confrontation with a US-led order are sustaining a degree of 'Iran-first' patriotic support, tolerance or simply patience with the regime.”

The result is a more stubborn impasse than Washington may have anticipated. Economic pressure is deepening the pain, but Tehran's powerful Revolutionary Guards may see endurance, backed by the threat of escalation, as leverage rather than a reason to concede.

The key question is not whether Iran is ⁠hurting, but whether it is hurting enough to compromise before either side slips toward another confrontation, the regional sources said.

Ross said the clearest path to a deal may lie in the dispute over shipping fees through the Strait of Hormuz. Iran could abandon any demand for a toll while retaining the right to charge for legitimate navigational, security or environmental services, he said.

Such an arrangement could give both sides a claim to victory, allowing Tehran to step back without appearing to capitulate.

“If you could announce that the Strait were reopened,” Ross said, “I think Trump would do a deal.”