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

President Masoud Pezeshkian initially rejected Paknejad’s resignation, submitted some time earlier because of “personal issues,” but accepted it after the minister again pressed to step down, deputy presidential communications chief Mehdi Tabatabaei said.

Paknejad’s departure, the first by a minister from Pezeshkian’s cabinet, followed weeks of Iranian media reports linking his position to disputes over sanctioned oil sales, major energy projects and management of Persian Gulf Petrochemical Industries Company (PGPIC).

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Pezeshkian appointed National Iranian Oil Company (NIOC) managing director Hamid Bovard as acting oil minister. The government has not indicated whether Bovard will remain a caretaker or be nominated for the post.

Export crisis raises questions

Several Iranian outlets had linked Paknejad’s resignation to disagreements with Pezeshkian during cabinet meetings over the oil ministry’s handling of sanctioned crude sales.

Other reported disputes concerned delays to major projects, including development of the South Pars gas field, and the network of intermediaries entrusted with selling Iranian oil and returning the proceeds while circumventing sanctions.

Paknejad left as Iran’s floating oil inventories were approaching exhaustion and questions mounted over around 80 million barrels handed to intermediaries, Rouydad24 wrote.

The website questioned whether “personal reasons” adequately explained the timing, arguing that replacing the official overseeing the sector would not resolve falling exports, foreign currency shortages, unpaid oil revenues and the opaque structure of sanctioned sales.

Eghtesad Online website similarly questioned why Pezeshkian accepted a resignation that had been pending for some time when Iranian oil exports had approached zero.

Billions at stake in trustee system

The use of trusted intermediaries to sell crude under sanctions has become a central controversy surrounding the oil ministry, with lawmakers and media raising questions over unpaid revenues and the allocation of oil.

One intermediary, Hassan Aghayari, owed several billion dollars, ILNA reported on September 13, citing a letter Bovard sent to a senior supervisory body while serving as NIOC chief.

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The contract allowing Aghayari to sell oil was concluded on the minister’s order without approval from the sanctions-countering task force, Bovard wrote, according to ILNA. The oil ministry denied the report.

Around 80 million barrels were separately handed to four intermediaries following the Islamabad agreement, lawmaker Valiollah Bayati told Hamshahri newspaper. Hossein Shamkhani, son of former Supreme National Security Council secretary Ali Shamkhani, was among them, Bayati said.

More than 86 million barrels were allocated to trustees without guarantees, lawmaker Hossein Samsami said. Around 30 million barrels reached final buyers, leaving the status of more than 56 million barrels unclear, according to Samsami.

The accounts have raised questions over how intermediaries were selected, what guarantees were required and why further allocations went to people who allegedly owed money from previous oil sales.

Battle over petrochemical giant

Paknejad’s departure has also been linked to a dispute with Mohammad Shariatmadari, head of PGPIC, Iran’s largest petrochemical holding company.

The oil ministry sought to replace Shariatmadari with Hassan Abbaszadeh in July 2026. PGPIC rejected the move, saying it lacked the procedures required under stock-market regulations and board approval. Shariatmadari remained with support from the presidential office.

Paknejad was unwilling to remain as minister if Shariatmadari kept his position, Iranian media reported. Meetings ordered by Pezeshkian failed to settle the dispute, according to those reports.

Shortly before the resignation was accepted, editor of the oil-focused outlet Miz-e Naft Vahid Hajipourwrote on X that Paknejad had been given an ultimatum at a cabinet meeting over Shariatmadari’s continued tenure.

“Paknejad did not accept,” Hajipour wrote, adding that Pezeshkian consequently decided to end cooperation with the minister.

Political pressure

Political pressure offers another explanation. Parliament speaker Mohammad Bagher Ghalibaf was angered by the removal of his ally Hossein Ghorbanzadeh from PGPIC’s board and Paknejad’s refusal to reinstate him, journalist Hatef Salehi wrote on X on October 1.

Ghalibaf subsequently pressed Pezeshkian to remove Paknejad, Salehi said.

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“If the oil minister is replaced in the coming days, the roots of the decision should be sought in Ghorbanzadeh’s longstanding friendship and relationship with Ghalibaf, not in the government’s strategy,” Salehi wrote.

The competing accounts leave no single explanation for Paknejad’s departure, placing it instead at the intersection of an export crisis, disputed sanctioned oil sales, a battle over one of Iran’s biggest companies and reported political pressure over control of key posts.

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 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.

Foreign Minister Abbas Araghchi, speaking before leaving New York on Tuesday, rejected suggestions that Tehran had agreed to nuclear concessions, saying Iran’s immediate focus was the Strait of Hormuz.

Despite Trump’s rejection of the Iranian proposal, Araghchi said he had told Qatari mediators that Tehran would wait for an official US response through them.

The reformist newspaper Shargh said Araghchi’s remarks carried an important message: Tehran did not want its return to diplomacy to be interpreted in Washington as a retreat from its nuclear positions.

The dispute is increasingly about whether that diplomatic opening can produce an agreement before pressure gives way to another round of escalation.

An opening, but on whose terms?

President Masoud Pezeshkian reiterated on Wednesday that his government was seeking to bring the Islamabad understanding to fruition. He did not comment directly on Trump’s rejection of Iran’s proposal.

Parliament Speaker Mohammad-Bagher Ghalibaf, meanwhile, responded sharply to Trump’s recent statements, warning that Iran would retaliate against further military action.

“In a region where we do not sell oil, no one will sell oil, and if our security is not ensured, no infrastructure will be safe,” he said.

“The main issue in the coming days will not be whether Iran and the United States are talking to each other, but whether they can move from exchanging messages to an implementable formula,” Shargh wrote.

It said a US response meeting at least some of Tehran’s conditions could lead to more serious negotiations, while failure to find such a formula would return the dispute to “a logic of pressure and confrontation.”

Etemad, another reformist daily, raised a different concern: that the Strait of Hormuz could lose value as an Iranian bargaining tool the longer the confrontation continues.

It argued that if the blockade, restrictions on Iranian oil exports and pressure on Iran’s commercial networks become entrenched, Washington could increasingly rely on economic pressure rather than further large-scale military action.

Former Iranian diplomat Kourosh Ahmadi made a similar argument in Shargh, saying Iranian officials should recognize that “diplomacy is an arena of give-and-take” rather than expect progress while offering almost no concessions.

Trump’s rejection of Tehran’s proposal, he argued, showed that the dispute was increasingly about “who sets the negotiating ground and who will be forced to put more concessions on the table to get out of pressure.”

If diplomacy fails

Hardline voices have pushed in the opposite direction, warning officials against interpreting continued diplomacy as evidence that Iran should compromise.

Political analyst Mehdi Kharatian rejected arguments that the Strait of Hormuz was losing its effectiveness as leverage.

“Do not be deceived by those who these days are flooding you with false and biased reports about the ineffectiveness of oil and the Strait,” he wrote, accusing such voices of implicitly advocating surrender to the United States.

He also warned officials against sending what he described as excessive signals of willingness to negotiate, arguing that doing so could encourage Trump to resume military action.

The possibility of another confrontation was also raised by IRGC spokesman Hossein Mahdavi, who told state television that Iran was already at war. He said the United States was unlikely to launch attacks on the same scale or with the same capabilities as before.

But he added: “In the world of war, everything is possible.”

Mahdavi also claimed Iranian forces continued to target vessels attempting to transit the Strait of Hormuz and that the United States had recently refrained from responding.

The conservative Khorasan newspaper raised the possibility of Iran launching pre-emptive attacks if negotiations over the nuclear issue fail.

It argued that Iran could resort to a “Plan B” aimed at seizing the initiative before its adversaries complete their intelligence and logistical preparations, potentially triggering a period of intensified warfare before the US midterm elections.

The competing prescriptions emerging in Tehran reflect a debate that has moved beyond whether communication with Washington should continue. What the opposing camps increasingly share is a sense that the current diplomatic opening may not remain open indefinitely.