So far, the impact of Western sanctions - an EU embargo of oil purchases, European and U.S. restrictions on Tehran's access to international banking, and a new move to intensify the trading restrictions even further - have had a devastating impact.
Iran's currency, the rial, has collapsed.
Riots have begun. Its government has rapidly lost its authority. And the Iranian economy is unraveling.
This has all the markings of a full-blown crisis.
It will have an uncertain impact on the region and the wider oil market. This could get very unpredictable and very nasty.
Let me explain...
Sanctions Paralyze Iran's EconomyIndications are emerging from several quarters that the current sanctions regime has dealt a major blow to the Iranian currency. The developments are prompting foreign initiatives to paralyze the regime in Tehran.
"The current perception is that the sanctions may have to be increased before Tehran will show clear signs of relenting," a source in the EU Energy Commissioner's office told me on October 6.
Still, it remains too early to determine how far EU members are prepared to go in strengthening anti-trade restrictions.
Nonetheless, several policy sources in Brussels, London, and Paris, confirmed last week that a rising consensus believes something additional is warranted.
A complete EU embargo of Iranian oil imports took effect on July 1. That action had widely been expected to put upward pressure on Brent prices in London. While some of that pressure has materialized, continuing demand concerns from the ongoing credit crisis and sluggish employment data have dampened the impact.
Still, a widening of the rift with Iran, coupled with the deteriorating situation on the Syrian-Turkish border, is certain to bring the problem to center stage.