Why Iran’s oil minister quit at a critical moment for exports

On Thursday, the end of Iran’s market week, the rial fell to another record low. Year-on-year inflation has reached almost 90 percent, with food prices rising even faster.

The deterioration comes as US sanctions and a naval blockade squeeze Iran’s sources of revenue. The blockade has severely constrained oil exports, while Washington on Thursday expanded sanctions into the automotive and rail sectors, targeting some of the country’s largest industrial companies.

US Treasury Secretary Scott Bessent has seized on the rial’s collapse as evidence that Washington’s pressure campaign is working, saying this week that it had driven the currency to its lowest level in history.

Iranian Economy Minister Ali Madanizadeh rejected Bessent’s assessment, telling the official IRNA news agency Thursday that predictions of an imminent economic collapse had repeatedly proved wrong.

“They want to create unrest and stress among the people so they rush to the currency market and the exchange rate increases; otherwise, these statements serve no purpose, and we will not allow this to happen,” he said.

The Central Bank has offered a similar diagnosis. It said Friday that the exchange rate was not “fully consistent with the economy’s fundamental variables,” attributing much of the gap to heightened uncertainty, psychological pressure and market expectations.

The bank announced Wednesday that it planned to inject $2 billion in banknotes into the market. So far, however, the intervention has failed to halt the rial’s slide.

‘The Central Bank shoots it into its own goal’

Hardliners have challenged the government’s explanation, arguing that sanctions and the war cannot by themselves account for the surge in the exchange rate and prices.

Nadergholi Ebrahimi, a hardline lawmaker, claimed in an online interview Thursday that the war had contributed no more than 25% to the recent rise in prices and accused government economic officials of deliberately fueling inflation.

Threatening to seek the impeachment of economic ministers, he accused them of waging an “economic sedition” that was reducing the public’s ability to withstand economic pressure and increasing dissatisfaction.

Hossein Samsami, an economist and hardline lawmaker, has also attacked the Central Bank’s handling of the exchange rate.

“Today, the currency is the enemy’s tool in an all-out economic war, and the measure of its success is the devaluation of our national currency,” Samsami wrote on X.

But he accused the Central Bank itself of helping drive that process by following an exchange rate he said was artificially determined by Iran’s enemies.

“The enemy passes the ball, and the Central Bank shoots it into its own goal!” he wrote.

Inflation approaches 90 percent

Whatever the relative weight of sanctions, war, expectations and domestic policy, their combined effect is increasingly visible in household finances.

According to the Statistical Center of Iran, annual inflation has reached 73.6%, while year-on-year inflation rose to a record 89.8%.

Food and beverage prices have risen substantially faster than overall inflation, hitting lower-income households particularly hard because they devote a larger share of their income to food and other essentials.

Accelerating prices have also eroded the value of government food vouchers introduced after subsidized foreign-exchange rates for a range of goods were removed amid a sharp depreciation of the rial and economic protests in December and January.

Although the government pledged to increase the value of the vouchers in line with rising prices, it has yet to do so.

Wages fall behind as prices surge

The pressure is also increasingly visible among salaried workers.

Videos circulating on social media in recent weeks have shown teachers and nurses saying low wages have left them with no choice but to resign after years in their professions.

Ali Farhadi, spokesman for Iran’s Education Ministry, dismissed reports of widespread teacher resignations as a “rumor” on Friday.

The dispute has become another front in the broader argument over the economic crisis, with government supporters alleging that expressions of discontent are being amplified to encourage unrest and critics accusing authorities of dismissing genuine economic grievances.

Samsami, however, has placed greater responsibility for the hardship on domestic economic policy than on Washington.

“The pressure imposed on people’s livelihoods by misguided economic policies is far greater than that caused by sanctions and the naval blockade,” he wrote, adding: “We are not at an impasse. By reforming our policies, we can control inflation even under these sanctions.”

Before trading closed on Wednesday, the final working day of the week in Iran, the Tehran Stock Exchange reached a record 7,766,000 points.

The market has risen 109 percent since the start of the Iranian year, while small investors poured roughly 4.7 trillion tomans, or about $19 million, into shares in a single day.

Iran’s prominent economic daily Donya-ye Eghtesad argues that the surge is not necessarily a sign of confidence. People are buying shares as political and economic risks rise, it says, while savers are also moving into gold, coins and dollars, all of which hit record highs on the same day.

The open-market dollar has passed 250,000 tomans, while measured in dollars, the stock market remains well below previous peaks.

At least part of the rally therefore appears to reflect a search for protection against the falling rial rather than confidence in the underlying economy.

Similar pressures are visible in consumer markets, where prices for cheaper mobile phones rose 33 to 42 percent in a month, outpacing the currency’s decline as import quotas, registration rules and fees hit lower-priced devices particularly hard.

Earlier this week, the government announced that the central bank would sell up to $2 billion in cash. The first $1 billion tranche is being sold through banks, with adults holding a national ID card allowed to buy up to $10,000.

The government’s own newspaper, Iran, warned that selling cash may slow the dollar’s rise but cannot reverse the underlying trend while inflation, budget pressures and political uncertainty remain unresolved.

Tehran’s prosecutor also ordered action against “market disruptors,” including online channels publishing exchange rates. Eyewitnesses on Ferdowsi Avenue, the capital’s main currency-trading hub, reported shorter queues and more sellers than buyers on September 30.

The respite was brief. On October 1, the open-market dollar rose 1.49 percent to 2,593,000 rials, its highest level in a year.

The central bank has been steadily raising the official exchange rate, from about 137,000 to more than 174,000 tomans this year, to encourage exporters to repatriate their foreign-currency earnings. Even so, the open-market rate remains much higher.

Because official imports are priced at the exchange-center rate, increases can feed through into the cost of imported goods. They also reduce the real value of the government’s electronic food-voucher scheme unless the state spends more rials to maintain it.

Hardline outlets including Kayhan and the IRGC-linked Javan portray the rial’s fall as part of Washington’s economic war. But their criticism is also directed at Iranian policymakers.

Kayhan calls currency sales a repeatedly failed policy and a waste of resources in wartime. It wants the government to reverse its economic liberalization and use judicial and security pressure to force exporters to repatriate their foreign-currency earnings.

The criticism exposes an argument within the establishment over how Tehran should respond: spend scarce foreign currency trying to contain demand, or preserve it while tightening controls over exporters and the domestic market.

That argument is becoming more urgent as the US blockade curtails Iranian oil exports, depriving Tehran of a major source of foreign currency.

Diplomacy could provide some relief, with Iran seeking access to frozen assets and an easing of sanctions and the blockade as part of negotiations with Washington.

For now, however, the clearest signal comes from the markets themselves. Stocks, gold and the dollar are all setting records. The simultaneous rush into them suggests that for many Iranians, almost anything that might preserve its value increasingly looks preferable to holding rials.

Iran’s Foreign Ministry on Thursday condemned Netanyahu’s visit, warning of what it called the “very dangerous consequences” of an Israeli presence in the region.

The ministry said any move that provides “a platform for destabilizing actors to enter the region” would ultimately harm regional countries by fueling division and instability. It called on governments to prevent their territories from becoming “a platform for destabilizing actions” against neighboring states.

Mohsen Rezaei, secretary of Iran’s Supreme National Security Council, issued a more direct warning to the UAE on Wednesday.

“Just as hosting US military bases has not brought you security, hosting the butcher of Gaza will not have positive consequences either,” he wrote on X. “Learn from the recent war, stop starting wars and refrain from making baseless claims about the Iranian islands.”

The hardline Javan newspaper, affiliated with the Revolutionary Guards (IRGC), described Rezaei’s remarks as “a clear warning to Abu Dhabi,” saying Iran’s neighbors could pay a price for policies they believed would bring them greater security.

The rhetoric comes as the UAE’s security relationship with Israel faces fresh scrutiny following an attempted attack aboard a Flydubai flight from Dubai to Tel Aviv.

Israeli and Emirati authorities are investigating the incident, while US President Donald Trump said Thursday that investigators were examining a possible Iranian connection, although no evidence of Tehran’s involvement has been made public.

Iranian media intensify criticism

The criticism in Iranian media has increasingly gone beyond Netanyahu’s visit, with conservative outlets portraying the UAE as an active participant in efforts to contain Iran and questioning whether its cooperation with Israel extends beyond diplomacy.

Nour News, which is close to the Supreme National Security Council, accused the UAE of pursuing a two-track policy — publicly advocating de-escalation and dialogue with Iran while maintaining close security ties with the United States and Israel and pressing its claims to the disputed islands.

The website also portrayed Netanyahu’s visit as part of broader Israeli-Emirati efforts to reshape the regional security order and increase pressure on Saudi Arabia, though it offered no evidence of a coordinated plan.

Sobh-e No, considered close to parliament speaker Mohammad-Bagher Ghalibaf, warned that cooperation with a country involved in a war against Iran, whether military or intelligence-related, could affect Tehran’s security calculations.

The newspaper questioned whether the UAE’s role had been limited to hosting political meetings or whether its security cooperation with Israel had extended to the military confrontation with Iran.

Economic ties under strain

The increasingly hostile rhetoric comes against a history of extensive economic ties between Iran and the UAE, although Abu Dhabi suspended trade with Iran in August amid the war.

In 2024, around $21 billion of Iranian imports came from the UAE, accounting for roughly 30% of the total, according to World Trade Organization data. The UAE was also one of Iran’s largest destinations for non-oil exports.

The country has also long served as a hub for Iranian companies and intermediaries involved in moving goods and money around US sanctions.

Some Iranian conservatives are now arguing that those economic ties gave the UAE excessive influence over Tehran’s policy.

Conservative political activist Ali Gholhaki accused the UAE of profiting from sanctions on Iran while increasingly using its influence in Israel’s favor. He also alleged the existence of a “UAE lobby” inside Iran that had prevented Tehran from taking punitive measures against Abu Dhabi.

Calls for retaliation

The rhetoric has gone further among some figures close to Iran’s political establishment, with calls for direct retaliation against the UAE.

Mehdi Mohammadi, a strategic adviser to parliament speaker Ghalibaf, accused the UAE of cooperating with Netanyahu in launching a war against the Islamic Republic in a commentary published by the conservative Alef website.

“There is not much difference between them and the Israelis,” Mohammadi wrote.

“This time, the Emiratis should taste in Dubai, Sharjah and Ras al-Khaimah what they have brought about in Africa, Yemen, Somalia and the Arabian Peninsula. It is time for flames of light to be seen in the middle of Dubai.”

The rhetoric marks a sharp deterioration in Iranian discourse toward a neighbor with which Tehran had until recently sought de-escalation and maintained extensive commercial ties, with Netanyahu’s visit intensifying an already widening rupture over Israel, regional security and the disputed islands.

Iran has disputed US accounts that Secretary of State Marco Rubio ordered Foreign Minister Abbas Araghchi and his delegation to leave the country after indirect negotiations in New York reached a stalemate.

Iran’s UN mission said the delegation left according to a schedule communicated to the State Department on September 17 and dismissed reports of a US-mandated departure as “baseless and worthless.”

Two US officials told the Associated Press that Rubio ordered the delegation to leave after little progress in indirect talks mediated by Qatar.

The dispute follows Washington’s response to Iran’s seven-point proposal for de-escalation and reopening the Strait of Hormuz. Araghchi has said Tehran has made no changes to the proposal, which calls for lifting the blockade and unfreezing Iranian assets as steps toward reopening maritime transit and resuming nuclear negotiations.

Iranian media have nevertheless stopped short of declaring the diplomatic process dead.

Across outlets ranging from the government’s Iran Newspaper and state broadcaster-affiliated Jam-e Jam to the moderate business daily Donya-ye Eghtesad, the negotiations are portrayed as a stalled bargaining process rather than a complete collapse.

Washington’s response, delivered through Qatar, is seen as keeping the diplomatic channel open even as the two sides remain far apart.

Across the three outlets, four broad conclusions emerge.

First, no comprehensive settlement appears close. Even the more optimistic assessments envisage, at best, a phased arrangement focused initially on crisis management rather than a broader breakthrough.

Second, trust remains a central constraint. Iran Newspaper and Jam-e Jam cite the US withdrawal from the JCPOA in 2018 and subsequent American policy, while Donya-ye Eghtesad frames the problem more neutrally as the enduring question of which side should move first.

Third, the central dispute is increasingly about sequencing. Tehran wants an end to hostilities, sanctions and blockade relief before reopening Hormuz within seven days and moving to nuclear talks. Washington wants nuclear concessions and movement on Hormuz before easing pressure.

Fourth, from Tehran’s perspective, the Islamabad Memorandum of Understanding remains the principal reference point. The Iranian press portrays the seven-day plan as an accelerated version of the June framework rather than a departure from it.

As the government’s voice, Iran Newspaper presents the seven-point proposal as a reasonable sequence that Washington is obstructing.

It also turns its attention to actors it sees as working against diplomacy, linking Benjamin Netanyahu’s visit to the UAE and his reported intelligence briefing there to efforts to build regional opposition to Iran.

Jam-e Jam similarly rejects accusations that Tehran is seeking to avoid the nuclear issue, arguing that the proposal would bring forward the start of nuclear negotiations from roughly 60 days to seven.

Donya-ye Eghtesad, however, focuses more heavily on the costs of prolonged deadlock. It treats the US response as a test of Iran’s willingness to show nuclear flexibility and argues that verifiable limits on its program would improve the prospects for an agreement.

Despite their different political orientations, the three outlets broadly treat the seven-point plan as the basis for further negotiations rather than something Tehran should abandon.

The remaining debate is largely about timing.

Iran Newspaper and Jam-e Jam argue that leverage over Hormuz, combined with US pre-election concerns about energy prices, favors Tehran holding firm. Donya-ye Eghtesad warns instead that the diplomatic window could close within weeks and that the risks of waiting until after the election may outweigh the benefits.

Trump’s rejection of key Iranian demands, Israeli intelligence activity and the UAE’s acknowledgement of Netanyahu’s visit also provide ammunition to voices in Tehran arguing against early concessions.

Jam-e Jam compared the diplomatic process to a game of Snakes and Ladders, in which every advance is followed by a setback. For now, it sees the US midterm elections as the next major variable that could alter the calculations of either side.

The push to settle bilateral trade outside the dollar has drawn renewed US scrutiny. Last month, the US Treasury imposed new sanctions on Russia’s VTB Bank, in part for its role in creating a ruble-rial settlement system.

On Thursday, Treasury also targeted the Russia-linked A7 Network, describing it as a “shadow banking network” used by Iran to evade sanctions. It said A7’s sub-agents formed a money-laundering and sanctions-evasion mechanism connected to Russian illicit finance that Iran used to move funds, including for oil sales and weapons procurement.

Both governments have spent years insisting they don’t need the dollar, but the amount of trade settled in each other’s currencies isn’t a number you need to announce unless you’re trying to convince people that sanctions aren’t working.

Sanctions leverage only works if people believe it is there. To convince people otherwise, Russia has since 2019 announced a rising share of its Iran trade settled in rubles and rials: from 40 percent to 50, 60, 80, until Putin himself claimed 95 percent in January 2025.

The Islamic Republic communicates in broad proclamations rather than Soviet-style quarterly statistical reports: its central bank governor said in November 2024 that Iran had “completely excluded the dollar” and traded only in rubles and rials.

But the internal plan, approved in September 2024, put it at 68 percent, with a goal of 71 by 2026.

The reality doesn’t fit the claim

The Kremlin’s claim of a working ruble-rial payment system is harder to sustain when the two sides have an imbalance in trade, because that can leave one side without enough of the other’s currency to meet demand. Russian figures put 2023 bilateral trade at about $4 billion, comprising $2.7 billion in Russian exports and $1.3 billion in Iranian exports.

The two countries also simply do not like holding each other’s currencies. Russia’s central bank described its problem with currencies like the rial in 2023: they are “often non-convertible or only partially convertible,” carry “higher volatility,” and trade in markets too thin to hedge.

Iranian exporters, according to Iran’s Resistance Economy Think Tank, refuse rubles when they can, and if they accept them sell them for dirhams as quickly as possible.

The usual fix for a shortage like this is a central bank swap line, which Iran and Russia signed in July 2024. Two years on, however, the only money either side has publicly put behind it was a 1 billion-ruble deposit, worth about $10 million at the time, at VTB to cover “possible ruble shortages,” and any further draw would leave Russia holding rials as collateral — a currency it cannot sell at home and that has lost 29 percent against the ruble since January.

An Iranian MP says Russia has offered a $20 billion ruble loan that Iran has not taken.

The trade goes around it

If the ruble-rial system worked as advertised, Iranian merchants wouldn’t be paying exchange houses in Dubai and Turkey to reach Russian suppliers.

Iranian MP Meysam Zohourian told Fars News in June that before the war even essential goods bought from Russia were routed through the UAE and settled in dirhams.

Fars asked in August why merchants still settle Russia trade through exchange houses and trustees in Turkey.

Iran’s central bank governor, Abdolnaser Hemmati, called his June trip to Moscow “an operational mission to untie the knots” in foreign trade, starting with letters of credit for Iranian merchants.

What the number counts

Whatever number is claimed, it doesn’t measure money moving between Russia and Iran — it’s a bookkeeping instrument, recording which currency left a Russian company’s account, not what currency reached the other side.

If a Russian importer’s bank takes rubles out of its account, converts them to dollars, and pays the seller in dollars, Russia’s Central Bank counts that as a ruble settlement, despite a contract priced in dollars and a seller that receives dollars.

The number also leaves out trade arranged without conventional cross-border payments. When countries are cut off from the international financial system, it’s easier to move goods than money, and Russia and Iran have increasingly turned to barter and swap arrangements.

Moscow has made barter official policy. The economy ministry issued a government manual for barter contracts in 2023, and a Russian economist says Iran is the one trading partner where barter accounts for a real share of the trade.

Russia and Iran have also pursued energy swaps. Swap deliveries of petroleum products had begun by late 2022, while the two sides were discussing a broader arrangement covering up to 5 million tons of oil and 10 billion cubic meters of gas a year. Trade conducted through such arrangements would not necessarily appear in the national-currency settlement percentage.

What the mismatch tells you

Russia and Iran’s coordination is real, but both countries overstate the impact. The public number, announced for propaganda value, doesn’t even match the government’s internal goal.

And the mechanism is in reality a cobbled-together assortment of poorly working, mismatched payment arrangements that don’t serve either side well except in their fight against the international financial system.