Oil dependence and sanctions Since the
Iranian Revolution, Iran has been heavily dependent on oil revenues to supply the government's annual budget, making it very vulnerable to market prices and particularly international pressure. In the
fiscal year of 2009, 60% of the government's budget came from its large oil and gas sector. For decades, Iran has been subject to criticism based on its
nuclear programme,
sponsorship of terrorism, and
human rights record, resulting in strict sanctions which restricted Iran's access to finance and technology and negatively affected its economy. The 2015
Joint Comprehensive Plan of Action nuclear deal marked a significant turning point in international relations and led to the lifting of many nuclear-related sanctions, which led to a rebound in the economy of Iran and renewed its access to global markets. When the United States
unilaterally withdrew from the deal, the economy of Iran was once again in jeopardy. The move crippled Iran's oil exports and once again isolated it from the global financial system and is arguably the main cause of the country's current crisis. To mitigate the crisis, the government stopped using the SWIFT system in lieu of alternative financial platforms and
barter agreements with allies (especially China & Russia).
Economic mismanagement Iran is a
mixed and
centrally planned economy. Due to persistent corruption, the role of the government in the economy acts as more of a limiting factor to development, imposing burdensome regulations against public companies. Additionally, government-controlled corporations may easily crowd out the weak public sector and benefit from preferential access to resources and contracts, but often operate less efficiently compared to their public counterparts. This economic corruption hinders public trust and investor confidence alike, despite government attempts to downplay the issue. For instance, former
Iranian Supreme Leader Ali Khamenei has stated that although there "are cases of corruption; it is not systematic" in Iran. In 2013, a Reuters special investigation found that Khamenei himself controls
a massive financial empire built on property seizures worth $95 billion.
Energy crisis One of the foremost symptoms of mismanagement in Iran manifests through its power grid. Many of Iran's power plants, refineries, and energy distribution networks were built decades ago and have not received necessary investment or modernisation. Poor maintenance and ageing equipment lead to frequent breakdowns and inefficiencies. Subsidies on energy prices have historically appeased the public, but have resulted in increased waste and made policymakers reluctant to increase prices to stabilise the sector. Corruption is also a factor in the crisis; the
Islamic Revolutionary Guard controls the energy sector, and a significant proportion of the oil is smuggled abroad and funds intended for the sector are siphoned by the guard. Despite the ongoing power shortages, Iran continues to export an increasing amount of gas and especially electricity, with a surge of nearly 92% in the first four months of 2023 compared to the same period in 2022. The hostile nature of the
energy sector has led to an environment in which half of
Iran's industry has halted due to rolling blackouts. This has resulted in an exodus of international corporations and investment, and implemented a harsh bottleneck on the production capability of the companies that have managed to remain. Since February 2025, power goes out nationwide for 3 to 4 hours every day due to the crisis, and anti-government protests have erupted across the country.
Iran's foreign military involvement Foreign military spending by Iran has been a source of domestic contention, as resources allocated to regional interventions compete with social welfare, infrastructure development, and economic stabilisation at home. Periods of economic hardship, marked by inflation, currency depreciation, and unemployment, have intensified public criticism of expenditures perceived as benefiting foreign allies rather than the domestic population. For instance, the Islamic Revolutionary Guard Corps (IRGC) has transferred more than $1 billion to
Hezbollah in Lebanon during the first 10 months of 2025, according to recent U.S. Treasury Department disclosures. Hezbollah employs approximately 40,000 full-time personnel, according to
Tom Barrack, the U.S. Special Envoy in Turkey. Each receives up to $2,200 monthly in salary. By comparison, Lebanon's official army has 60,000 soldiers who earn approximately $275 per month — just 12% of Hezbollah salaries, Barrack said.
Twelve-Day War Amidst the broader
Middle Eastern crisis, historical
tensions with Israel erupted into
open warfare in 2025 after Israel struck Iranian civilians, military and nuclear sites before a declaration of war was made. This jump-started a series of back and forth strikes between Israel and Iran and its allied forces in the region. ==Timeline==