Iran's economy is sucking wind

Tensions are escalating between the United States and Iran – and its economy is buckling even further after the U.S. pulled out of the Iran nuclear deal last year and reinstated sanctions.

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Over the weekend President Trump lashed out at Iran after a rocket landed less than a mile from the U.S. Embassy in Baghdad's heavily fortified Green Zone, the first such attack since September as reported by Fox News. An Iraqi military spokesman told reporters the rocket appeared to have been fired from east Baghdad, which is home to several Iran-backed Shiite militias.

Late last week, U.S. Navy ships were headed to the Persian Gulf, days after four oil tankers, including two belonging to Saudi Arabia, were targeted in an apparent act of sabotage off the coast of the United Arab Emirates, according to officials in the region, and a Saudi pipeline was attacked by Iranian-backed Houthi rebels from Yemen, according to reports.

The U.S. also ordered non-essential staff out of Iraq and has dispatched additional military assets to the region.

This is a "high risk" situation for the world oil market, said Phil Flynn, a senior energy analyst at The PRICE Futures Group and a FOX Business contributor, on Friday.

For Iran's economy, the damage is far along, as the U.S. "has launched a major form of economic warfare against the Islamic Republic of Iran," said John Hannah, a former national security advisor to Vice President Dick Cheney, during an interview with FOX Business' Neil Cavuto. "They are slowly but surely bringing that country to its knees" he added.

FOX Business takes a look at the middle eastern country in the midst of a recession that economists say could deepen very soon.

Economic Growth is Contracting

As of early 2019, Iran's economy is spiraling backward, contracting at a rate of 6 percent after contracting nearly 4 percent in 2018, as tracked by the International Monetary Fund. By comparison, the U.S. economy grew at a rate of 3.2 percent in the first quarter of the year, according to the Commerce Department.

Runaway Inflation 

As the economy shrinks, prices are skyrocketing, with inflation soaring higher than 32 percent. Higher inflation makes it more costly for consumers to buy goods and services. In the U.S., inflation has remained persistently below the 2 percent range, the preferred level of the Federal Reserve.

Soaring Unemployment

Iran's youth has been dealt an economy that has few jobs. Unemployment is currently running around 12 percent, according to TradingEconomics.com (this as the United States enjoys the strongest job market in more than 50 years). Unemployment has fallen to 3.6 percent as of April, while employers created a robust 263,000 new jobs. To date, there are more job openings, 7.5 million, than there are available workers to fill these roles. Last check about 5.8 million Americans were in the market for work.

Iranian Oil is Tainted

Oil, the lifeblood of the Middle East, could help Iran limit its economic spiral -- or even reverse it. However, Trump lowered the oil boom by not renewing waivers to buyers of Iranian crude when they expired on May 2.

This means all countries that continue to import Iranian oil will be subject to U.S. sanctions.

The Associated Press contributed to this report. 

*This story, originally published on 5/17, was updated on 5/20.