Key facts
- Iran's oil minister, Mohsen Paknejad, resigned citing personal reasons.
- The resignation follows allegations of millions in owed export receipts by an intermediary trust.
- Iran's economy contracted by 10% in the first three months of the year.
- Inflation in Iran is running at 85%.
- The rial has fallen over 10% in the past month.
- The dollar reached a record high of 269,000 tomans this week.
Iran's oil minister, Mohsen Paknejad, has resigned amid a deepening economic crisis, with inflation at 85% and the national currency, the rial, experiencing a significant devaluation. The departure follows allegations that a trust responsible for selling Iranian oil abroad owed millions of dollars in export receipts to the state.
President Masoud Pezeshkian accepted Paknejad's resignation, which was reportedly due to personal reasons. The rial has fallen more than 10% in the past month, largely attributed to a US naval blockade impacting Iran's oil sales, a primary source of government revenue. Emergency government meetings over the weekend have reportedly made little progress in addressing the crisis.
Reports indicate a growing number of professionals, including teachers and nurses, are resigning as their salaries fail to keep pace with rising prices. The economy contracted by 10% in the first quarter of the year. Despite concerns about potential protests due to continued sanctions, Iranian diplomats have not indicated any new concessions following the rejection of a proposal to expedite nuclear negotiations by Donald Trump.
Iran has been utilizing informal networks, known as "trustees," to circumvent US sanctions and repatriate oil revenues. A recent report alleged that a trust overseen by Paknejad owed the National Iranian Oil Company (NIOC) nearly $2 billion in revenues, with individual trustees also allegedly owing hundreds of millions. These reports, potentially stemming from internal power struggles within the oil industry, have prompted a parliamentary inquiry.
While the US naval blockade is identified as the primary cause of Iran's oil export and foreign exchange reserve issues, reports of lax management or corruption further erode confidence. The difficulties were reportedly conveyed to the president and the supreme leader, though no satisfactory response was received from the oil minister.
In an effort to stabilize public confidence, ministers are attempting to counter claims that oil is flowing through the Strait of Hormuz at pre-blockade levels. Attacks on ships in the region have increased, with four incidents reported in the past 48 hours. The dollar has reached a record high against the toman, with the minimum monthly wage now worth significantly less than before. Food inflation stands at 130%.
Tehran's mayor announced a six-month price freeze on 12 essential items, though enforcement remains uncertain. Ministers also indicated a potential second increase in public sector wages. Nurses' representatives have expressed extreme dissatisfaction with their living standards, suggesting it is more cost-effective to stay home than to work for current wages. Meanwhile, repression of dissidents continues, with the Reform Front leadership summoned by the ministry of intelligence.