Stories
Iran's Economy Shrinks 10.1% Amid US-Israel War, Oil Production Hit
- •Iran's economy contracted by 10.1% year-on-year in the quarter ending late June, coinciding with the US-Israel conflict.
- •The decline was largely driven by a 26.4% drop in oil and gas extraction and a 14.7% contraction in industries and mining.
- •Excluding oil, the economy still shrank by 4.6%, with services also falling by 4.8%; agriculture saw a 2.3% growth.
- •The conflict disrupted Iran's energy sector, trade, and transport, including restrictions on the Strait of Hormuz, impacting global oil prices and shipping.
- •This economic shock exacerbates existing challenges from US sanctions, a weakening rial, high inflation, and currency shortages.
Key Questions Answered
Iran's economy shrank by 10.1 per cent year-on-year in the quarter leading up to late June, according to data from the Statistical Center of Iran. When excluding oil, the economy experienced a 4.6 per cent contraction during the same period.
The oil and gas extraction sector experienced the sharpest decline, with crude oil and natural gas activity dropping by 26.4 per cent year-on-year. Meanwhile, the industries and mining group contracted by 14.7 per cent, and the services sector fell by 4.8 per cent.
Iran restricted traffic through the Strait of Hormuz following initial strikes, and a US naval blockade subsequently disrupted shipments. Consequently, Iranian crude loadings plummeted sharply from approximately 2 million barrels per day in March down to roughly 220,000 to 255,000 barrels per day by August.
