Iran is facing a serious economic challenge as its oil exports have reportedly fallen to zero amid renewed military tensions, international sanctions, and growing restrictions on access to foreign currency.
According to remarks attributed to Iran’s Central Bank Governor Abdolnaser Hemmati, the country is no longer exporting oil, creating another major pressure point for an economy that has long depended heavily on energy revenues.
“There is no doubt that we face restrictions on oil exports,” Hemmati said in a televised interview, describing the situation as a reality that Iran is now having to manage.
Despite the severity of the situation, Hemmati said the Iranian government and Central Bank had prepared for the possibility of a major decline in oil-related income. He indicated that authorities had been working on measures to manage the financial consequences and maintain economic stability.
Iran’s foreign reserves remain a major concern
One of the biggest challenges facing Tehran is access to its foreign currency reserves.
Hemmati highlighted a significant difference between Iran and other regional oil-producing countries, pointing out that countries such as Iraq and Qatar have greater access to their central bank reserves. Iran, however, continues to face restrictions because some of its foreign currency assets have been frozen under US sanctions.
According to Hemmati, these restrictions have made it considerably more difficult for Iran to access funds that could otherwise help ease financial pressure.
The issue is particularly important because oil revenues are a major source of foreign currency for Iran. Restrictions on both oil exports and international financial transactions can therefore have consequences far beyond the energy sector, affecting imports, businesses, government finances and everyday economic activity.
Iraq also faces pressure from disruptions in the region
Iran’s economic difficulties are also being felt through its relationship with neighbouring Iraq.
Before the latest escalation, Iran reportedly exported around US$12 billion worth of goods and services to Iraq each year. Of that amount, approximately US$4 billion was linked to the Iraqi government, including gas and electricity, while around US$8 billion involved private-sector trade.
Hemmati said Iraq had indicated that it would work toward resolving outstanding payments owed to Iran.
However, Iraq is also confronting economic challenges linked to disruptions in regional energy markets and the closure of the Strait of Hormuz, a strategically important route for global oil transportation.
The situation demonstrates how quickly regional conflict can extend beyond national borders. Disruptions to energy supplies, trade routes and financial transactions can affect countries that are not directly involved in military operations but remain economically connected to the region.
Iran seeks greater access to funds held in Iraq
During his visit to Iraq, Hemmati said Iranian and Iraqi officials discussed ways to facilitate the transfer and use of Iranian funds held in an Iraqi bank.
Iran is reportedly looking for greater flexibility in accessing these resources as it attempts to manage the financial impact of declining oil revenues and international restrictions.
Another proposal discussed involved using resources at the Trade Bank of Iraq to support guarantees issued to Iranian contractors working in Iraq.
Hemmati said Iraq’s prime minister approved the proposal and instructed officials to facilitate its implementation.
For Iranian businesses operating in Iraq, such arrangements could become increasingly important if restrictions on international banking channels continue.
Sanctions continue to shape Iran’s economy
US sanctions have for years targeted Iran’s oil exports and its ability to participate freely in international financial markets.
Those sanctions are designed to restrict Tehran’s access to foreign currency and limit revenues from one of the country’s most important economic sectors.
The reported collapse in oil exports to zero, if sustained, would therefore represent a significant challenge for Iran’s economic planners.
At the same time, the impact would not necessarily remain limited to government finances. Lower oil revenues can place pressure on currency markets, imports, public spending, businesses and consumer prices, particularly when access to international financial channels is already restricted.
A wider regional economic warning
The developments surrounding Iran, Iraq and the Strait of Hormuz highlight how closely energy, trade and geopolitics are connected.
The Strait of Hormuz is one of the world’s most strategically important energy corridors. Any prolonged disruption can create uncertainty for oil markets, shipping companies, governments and businesses across multiple regions.
For Iran, the immediate challenge is managing an economy under intense financial pressure while maintaining access to essential resources and trade partners.
For neighbouring countries such as Iraq, the challenge is balancing their own economic interests with the risks created by regional instability.
And for the global economy, continued disruption raises broader questions about energy security, supply chains and the resilience of international trade.
The situation remains fluid, and the economic consequences will depend heavily on how long the conflict, sanctions and disruptions continue.
