Oil, gas and Iran economic analyst
Iran’s economy contracted sharply in the spring as war hit its oil and gas sectors, with new data pointing to an energy crunch that could force Tehran to balance gas exports against rising domestic demand as winter approaches.
Iran’s Statistical Center reported that gross domestic product contracted 10.1% year on year in the spring, with almost every major sector shrinking except agriculture.
The value added of the oil and gas extraction sector, measured at constant 2021 prices, fell 26.4%. Its share of Iran’s economy also declined from 26% in the spring of last year to 21% in the same period this year.
International Energy Agency data show that Iran produced an average of about 2.6 million barrels of crude oil per day between April and June, roughly corresponding to the spring quarter. That was more than 20% below the same period last year.
Average daily oil production fell further to around 2.3 million barrels in the summer. With the United States imposing a naval blockade on Iran from mid-July, the contraction in GDP is expected to be significantly sharper in the summer than in the spring.
Gas distribution
Statistical Center data show that the value added of the gas distribution sector, measured at constant 2021 prices, fell by more than 21% in the spring from a year earlier.
Israel targeted gas-processing facilities at South Pars, the field that accounts for around 70% of Iran’s gas production, on March 18. Since then, Iranian officials have given varying estimates of the decline in gas production, ranging from 100 million to 230 million cubic meters per day.
The International Energy Agency’s initial estimates, published in May, suggested that Iran’s daily gas production may have fallen by around 100 million cubic meters.
The Statistical Center did not specify the exact daily volume of gas distributed during the spring. However, an earlier report showed that Iran produced and injected around 726 million cubic meters per day of processed gas into the distribution network in the spring of last year.
Given the 21% decline in the sector’s value added at constant prices, this suggests that gas supplied to the domestic network fell by roughly 152 million cubic meters per day this spring, to around 573 million cubic meters.
The decline is particularly significant ahead of winter. Iran faces a severe natural gas deficit during the cold months, with the daily shortfall reaching as much as 250 million cubic meters during periods of peak demand.
The government has consequently been forced to restrict supplies to industries, power plants and the petrochemical sector to meet rising residential demand.
The gas export puzzle
Despite the decline in gas supplied to the domestic network, Iran increased exports to one of its two gas customers.
Data from Turkey’s energy market regulator (EMRA) show that Iranian gas exports to Turkey increased 27% between April and June to 30 million cubic meters per day. Iran also exports gas to Iraq, although comparable data for the same period have not been published.
The increase in exports to Turkey may have two main explanations.
First, domestic gas demand is lower during the warmer months than in autumn and winter. Second, Iran’s industrial and petrochemical sectors may have experienced a significant decline in gas consumption because of the war.
According to earlier Statistical Center data, Iran’s petrochemical sector and industries consumed about 82 million and 397 million cubic meters of gas per day, respectively, in the spring of last year.
Combined, that represented roughly 75% of domestic gas sales, excluding exports, transmission and distribution losses, and gas used to operate the network itself. The combined figure was equivalent to about 66% of the total processed gas injected into the network that spring.
Israel targeted parts of Iran’s petrochemical complexes in Asaluyeh and Mahshahr during the spring. Together, those facilities account for around 70% of Iran’s petrochemical production. Israel also targeted the Mobarakeh and Khuzestan steel complexes, which together account for about half of Iran’s steel production.
It is therefore likely that gas consumption by these industries fell sharply during and after the attacks, freeing up some gas for exports.
But the situation could change rapidly as temperatures fall.
Household gas consumption rises to roughly twice its spring and summer levels in autumn and more than three times the warm-season level in winter. Households accounted for 49% of Iran’s total gas consumption last winter, according to the Statistical Center.
It remains unclear whether Iran will be able to maintain gas exports to Turkey and Iraq once domestic demand surges in the coming months.
Major General Yahya Rahim Safavi said Supreme Leader Mojtaba Khamenei’s decision to leave the government’s “hands open” in negotiations reflected significant strategic judgment.
“If the Supreme Leader has deemed it expedient and left the government’s hands open in the negotiations, that is an important act of prudence,” Safavi said in a televised interview.
He also pointed to coordination between Iran’s military and political leadership and said he hoped decisions by the Supreme National Security Council would help prevent another war.
The remarks provided rare public confirmation from a senior military figure that Pezeshkian’s government has the leadership’s approval to pursue negotiations. They followed a day of indirect exchanges between Iranian and US delegations in New York, though major differences remain over Washington’s naval blockade and Tehran’s conditions for ending the conflict.
The prospect of diplomacy also exposed competing views inside Iran over how far Pezeshkian should go.
Lawmaker Ebrahim Rezaei and the IRGC-affiliated Tasnim and Fars news agencies criticized Foreign Minister Abbas Araghchi’s meeting with US envoy Steve Witkoff. Rezaei questioned its authorization and called it a “sign of weakness,” while the outlets argued that it rewarded Washington and eased pressure on the United States.
Reformist politician Gholamhossein Karbaschi, meanwhile, said the president should meet Trump to help resolve the country’s problems, echoing a similar appeal from senior reformist figure Mehdi Karroubi.
Lawmaker Ahmad Bakhshayesh Ardestani went further, predicting that a Pezeshkian-Trump meeting would take place in New York.
“In my view, the meeting between Pezeshkian and Trump will take place,” he said. “Last year, Pezeshkian decided to meet, but the Americans did not show up.”
Bakhshayesh Ardestani, a member of parliament’s national security and foreign policy committee, also advocated acquiring a nuclear weapon before leaving the Nuclear Non-Proliferation Treaty.
“Buy or build the atomic bomb, then say you are withdrawing from the NPT,” he said, while acknowledging that senior officials were not currently seeking withdrawal.
The competing statements illustrated the political constraints surrounding the New York diplomacy: Pezeshkian is said to have received apparent backing to negotiate, but officials and political factions remain divided over direct contact with Trump and the concessions Iran should seek or offer.
Those talks are unfolding as US economic pressure begins to narrow Iran’s international connections. Iranian airlines continued operating some foreign services Wednesday after a US deadline aimed at grounding the country’s fleet by threatening sanctions against companies providing fuel, ground handling, ticketing and other services.
Bloomberg cited flight-tracking data showing at least six flights leaving Iran for destinations including Bangkok, Phuket, Shanghai and Kabul after the restrictions took effect.
But the pressure appeared to be uneven rather than ineffective. Iran’s Civil Aviation Organization said flights to Baghdad and Muscat had been canceled, while Azerbaijan suspended Iranian airline services and Turkish Airlines halted its flights to Iran until at least March 2027.
The restrictions add urgency to Tehran’s diplomacy by extending the economic confrontation beyond shipping and oil into civilian aviation. At home, however, authorities sought to show that wartime damage was being repaired.
An Oil Ministry official said around half of the damaged capacity at the South Pars gas field had returned to service and that the remaining planned restoration work would be completed before winter.
At the same time, a report of a deeper Iranian military role in Yemen showed how the conflict continues to extend across the region. IRGC personnel were on the ground helping the Houthis seize Yemen’s Red Sea coast from pro-government forces, the Associated Press reported, citing 10 officials and soldiers.
The report said Iranian personnel helped direct a rapid 115-kilometer offensive, marking Tehran’s most direct intervention on behalf of the Houthis since Yemen’s civil war began in 2014. Houthi forces also penetrated the communications of the National Resistance, allowing them to monitor movements and sow confusion.
That reported intervention could complicate efforts to contain the conflict while Tehran and Washington negotiate. Iran is signaling that its government has authority to pursue an agreement, but its regional military posture and the expanding sanctions campaign continue to generate pressure that could either drive diplomacy forward or deepen the confrontation.
Tar balls have been reported in several parts of Hormozgan province, including Soro and Golshahr in Bandar Abbas, with additional sightings reported in Hormuz and Minab, ISNA said.
Habib Masihi Taziani, head of Hormozgan’s environmental protection department, told ISNA that the amount found in Sirik was substantial and that experts were still assessing the extent of the contamination.
“The volume of tar balls in Sirik is significant,” he said, adding that authorities had begun work to manage the pollution with fisheries officials, port authorities, the Sirik governor’s office and the provincial crisis management agency.
Pollution reaches shrimp farming channels
The spread to the entrances of shrimp farming channels in Sirik has raised concern because aquaculture facilities there are directly connected to coastal waters.
Masihi Taziani told ISNA that conventional suction equipment was not effective for removing the tar balls.
“Collecting these oil masses with suction equipment is difficult,” he said. “Efforts are continuing to contain them and collect them using absorbent pads and other equipment.”
Tar balls are weathered remnants of petroleum products that can travel across the sea before washing ashore.
Officials warn pollution could persist for years
Ahmadreza Lahijanzadeh, deputy head of Iran’s Department of Environment for marine affairs, told ISNA the tar balls could cause significant damage to coastal and marine ecosystems.
“These oil masses can cause considerable environmental damage, and the resulting pollution can affect coastal and marine ecosystems,” he said.
Lahijanzadeh said organic compounds and heavy metals contained in the material could gradually enter the water and spread through the marine environment.
“The effects of this type of pollution are not limited to the period when the tar balls are visible on the coast,” he told ISNA.
“The entry and accumulation of these materials can cause pollution to remain in the sea for a long time, even for years,” he added, calling for continued monitoring and measures to identify and contain it.
The latest sightings follow several oil pollution incidents along Iran’s southern coastline in recent weeks.
In August, Iranian state news agency IRNA reported that oil had reached mangrove forests on Qeshm island after slicks appeared near Suza and Shib Deraz. Authorities said at the time that the source had not been determined.
Mehr news agency reported that the pollution had initially been detected along about one kilometer of coast near Suza before spreading toward Shib Deraz.
TankerTrackers.com later said the Qeshm pollution appeared to have come from an Iranian attack on the bulk carrier Minoan Pioneer off Oman on August 3, with the spill drifting across the Strait of Hormuz toward Iran. Iranian authorities did not confirm that assessment.
Tanker spills add to pollution concerns
A separate spill was reported off Oman after the tanker Caroline Bezengi, carrying Russian crude, ran aground.
The UN’s International Maritime Organization said oil from the vessel had begun reaching Oman’s mainland, while Oman’s Environment Authority said the slick covered about 150 square miles near the Hallaniyat Islands.
Reuters, citing maritime security sources, reported that the vessel’s crew had first reported difficulties off Yemen in June and that initial assessments pointed to an onboard blast.
The digital sign on Interstate 405, near Westwood's Persian Square, briefly displayed the address of Goorkan, a Persian-language site that publishes names, photographs and personal information of people it identifies as opponents of Iran's government.
"It touches the heart of the diaspora and sends a message. We can touch you wherever you are. The sophistication is irrelevant. The message is chilling," said Roger Macmillan, an Iran and terrorism specialist and former director of security at Iran International.
Who carried out the intrusion has not been publicly established, and US authorities have not confirmed a link to the Revolutionary Guards.
Three cyber and security experts told Iran International that the incident shows how a simple intrusion can intimidate a community far from the people who carried it out.
A simple hack, a powerful message
The intrusion looked unsophisticated next to the capabilities of Russian and Chinese operators, said Amin Sabeti, a cybersecurity researcher who specializes in Iranian cyber operations.
"It's not that sophisticated hacking. It's more about the propaganda," Sabeti said.
The attackers did not need to disable a transport network or break into a secure system. Putting a web address on a public sign beside one of the largest Iranian communities outside Iran was enough.
Sabeti said the effect falls hardest on ordinary Iranians who attend protests and keep public social media accounts. Finding their photograph or their details on a threatening website leaves them wondering who is watching and what it may cost them.
"It's more about creating chaos amongst the diaspora," he said.
Emel Karsaz, an Iranian-born Los Angeles resident, told the New York Post she reported the matter to the FBI after finding her name, photograph and personal information on the site, and that she had also received threats on social media.
The California Department of Transportation confirmed that an unauthorized message appeared on the sign and said it had instructed a contractor to restore normal operations. A review is under way.
The crudeness offers no comfort, Macmillan said.
"That the hack itself is unsophisticated doesn't reassure me. If anything it confirms what this operation was actually for," he said. "Sophistication was never the point. Fear was."
Tehran has long used intermediaries and loosely affiliated actors to intimidate its opponents abroad, Macmillan said, which lets it benefit from such operations while keeping its own involvement out of view.
How vulnerable was the freeway sign?
It appears to have been a straightforward compromise of a badly secured system, said Annie Fixler, director of the Center on Cyber and Technology Innovation at the Foundation for Defense of Democracies.
"This incident is 100% about intimidation," Fixler told Iran International.
Without the investigation's technical findings, she suspected the sign had an unsecured internet connection that let the attackers change what it displayed.
"It is deeply disturbing for those that saw the message but that is probably the extent of what the hackers could do with that access," she said.
The ease of it points to a larger problem with internet-connected public infrastructure, she added.
"The incident itself is not a big deal but the fact that so much of our systems are unprotected or misconfigured such that even low level hackers can do damage is the main take away. We need to be taking security seriously."
A familiar cyber playbook
The sign follows a run of cyberattacks on American infrastructure that experts have read as demonstrations of reach rather than attempts at damage.
In August, Iran International reported that attacks on water and wastewater facilities in at least seven states appeared aimed less at crippling infrastructure than at unsettling the public.
Federal authorities opened an investigation and did not publicly attribute responsibility, though US media reported that officials considered Iran the leading suspect.
Fixler described the tactic at the time as perception hacking: gaining limited access to a system, then publicizing it to suggest a far larger capability.
Los Angeles follows the same pattern with a narrower audience.
A wider campaign against dissidents abroad
The hack comes with renewed warnings about Iranian operations against opponents abroad.
On September 15, US, British and Dutch authorities issued a joint advisory that Iranian state cyber actors had deployed spyware known as Chosen Brick against dissidents, activists and journalists. The malware can pull communications and contacts from an infected device, exposing not only the target but everyone they know.
The same month, the Islamic Republic promoted a platform called Alaj, meaning remedy in Persian, which asks the public to identify and report opponents living abroad. Iranian state media say it has identified and monitored 1,600 people, 600 of them through public submissions.
It publishes names, photographs and, in some cases, further personal details, and lists measures that could follow, including asset freezes and restrictions on consular and citizenship services.
No operational connection between Alaj, Goorkan and the freeway sign has been publicly established.
"Treating it as trivial because the hack was crude would be a mistake," Macmillan said.
