How oil, gas losses have shrunk Iran’s GDP by 10 percent during war

Amid the US-Israel war on Iran, the country’s economy has suffered a sharp contraction, with its crucial oil and gas sector taking the biggest hit as the United States tightens its economic and military pressure on Tehran. Data released by the government-administered Statistical Center of Iran showed gross domestic product (GDP) shrank by 10.1 percent year-on-year between March 21 and June 20, the first quarter of the Persian calendar. The period covers the opening months of the US-Israel war on Iran, which began on February 28.

The economic downturn has come as Iran struggles to export its oil, one of its most important sources of foreign currency, while also contending with high inflation, a weakening rial, and disruptions to trade and industry. The headline GDP number masks an even steeper decline in Iran’s energy industry. Crude oil and natural gas activity contracted by 26.4 percent compared with the same period a year earlier.

GDP excluding oil, by comparison, fell by 4.6 percent. The damage has spread beyond the energy sector. Industry and mining contracted by 14.7 percent, services declined by 4.8 percent, and manufacturing contracted by 2.5 percent.

Agriculture was the exception, growing at 2.3 percent. Those figures come amid an already difficult economic situation in the country. Earlier this month, Iran’s 12-month average inflation reached 69.9 percent, while food, beverage, and tobacco prices rose at nearly twice that rate.

Official unemployment climbed to 9.1 percent in the spring. The rial, meanwhile, fell from about one million to the US dollar a year earlier to more than 2.2 million in early September. Iran’s ability to sell crude has been dramatically curtailed by the US naval blockade, imposed for most of the war.

Iranian crude and condensate loadings collapsed from about two million barrels per day in March to roughly 740,000bpd in July and just 220,000-255,000bpd in August, according to estimates from Kpler and Vortexa. TankerTrackers.com told the news agency that 29 tankers, carrying 36.11 million barrels of crude, were trapped in the Strait of Hormuz. Meanwhile, Vortexa estimated total Iranian crude afloat had fallen from 135 million barrels at the end of July to 107 million barrels by late August.