Senior visiting fellow, George Mason University
Iran’s oil minister Mohsen Paknejad resigned Sunday, leaving acting minister Hamid Bovard with crude exports choked by a US blockade and scrutiny of intermediaries used to sell sanctioned oil, raising questions over what he can change.
President Masoud Pezeshkian accepted Paknejad’s resignation on October 4 and appointed Bovard, chief executive of the National Iranian Oil Company (NIOC), to lead the ministry temporarily.
The presidential office said Paknejad had sought to resign some time earlier for personal reasons and that Pezeshkian initially wanted him to remain, eventually accepting the resignation at Paknejad’s insistence.
That leaves little verified basis for attributing his departure to the blockade or any particular dispute inside the oil industry. The more answerable question is what Bovard inherits — and which of the pressures facing Iran’s most important source of revenue are actually within the Oil Ministry’s control.
A blockade no minister can lift
The immediate problem is physical: Iran is struggling to get new oil to its customers.
Iran International reported, citing Kpler and TankerTrackers, that no Iranian crude cargo has crossed the US blockade line toward China since mid-July and that no new crude has been loaded at Iranian terminals since mid-August.
Iran initially kept deliveries going from crude already stored aboard tankers. By mid-August, around 67 million barrels had accumulated on vessels in Iran’s southern waters. But access to empty tankers became increasingly limited, bringing new loadings to a halt.
Iran’s crude production has consequently fallen to about 1.8 million barrels per day, roughly the amount required for domestic consumption and around half its pre-war output, according to Kpler.
The decline follows an already sharp fall in exports. Crude and condensate loadings were estimated at around 220,000 to 255,000 barrels per day in August, down from about 740,000 in July and roughly two million in March.
Paknejad, shortly before his resignation was announced, said revenue from oil already sold was continuing to reach Iran.
That is not necessarily at odds with the collapse in new loadings. Payments can continue for cargoes sold and delivered earlier even after the physical flow of fresh crude slows. The larger problem for the government is how long those revenues can be sustained without new oil entering the export system.
Here, Bovard’s room for maneuver is limited. A new minister cannot by himself remove a US naval blockade, provide empty tankers or reopen a route to China. Any meaningful recovery in export volumes would depend largely on a change in the conditions surrounding the blockade.
An oil-sales system Bovard can influence
The ministry has more direct control over another problem: how sanctioned oil is sold and how the proceeds are returned.
Iran has long relied on intermediaries, commonly known as trustees, to sell crude and move the proceeds because sanctions restrict its access to conventional banking channels. The system has become increasingly controversial as cases involving unpaid revenues and heavily indebted intermediaries have emerged.
Iran International reported on September 8, based on two confidential documents from the Oil Ministry and Supreme National Security Council, that large oil cargoes had been handed on credit and at steep discounts to four trustees who already carried substantial debts from earlier transactions.
One confidential letter said the four had been granted an unusually high discount of $8.50 per barrel despite outstanding debts and failures to return proceeds from previous oil sales.
The investigation also identified Mohammad Javad Bavand, appointed by Paknejad as special assistant for supervision of oil trading, as a central figure in managing a new network of intermediaries. Subsequent documents obtained by Iran International showed an 86-million-barrel oil consignment being assigned to four indebted trustees.
The cases form part of a broader dispute over oil revenues that have failed to return to the state. Iran International previously reported that the head of the State Inspection Organization had acknowledged at least $1.6 billion misappropriated by intermediaries, while 59 criminal cases had been opened.
The Oil Ministry has defended the trustee system as a necessity created by sanctions and rejected allegations that it failed to supervise the firms involved. But the controversy poses a problem that is more directly within a minister’s reach than the blockade: who receives oil to sell, on what terms, what guarantees are required and what happens when proceeds are not returned.
Bovard’s appointment is relevant here because he comes directly from NIOC, putting an official familiar with the operational side of the industry at the head of the ministry.
He also inherits a ministry that has faced disputes over appointments and authority. Iranian media have reported friction surrounding Mohammad Shariatmadari’s continued leadership of Persian Gulf Petrochemical Industries Company, including disagreement over attempts to replace him.
There is no established evidence that either the Shariatmadari dispute or the trustee controversy prompted Paknejad’s resignation, particularly given the presidential office’s account that he left for personal reasons. Their significance is instead in what they show about the management system Bovard is taking over.
What can actually change?
The two main challenges confronting Bovard therefore require very different responses.
The blockade is largely beyond the ministry’s control. Even an experienced NIOC executive cannot restore export routes or tanker access through an administrative reshuffle.
The internal oil-sales system is different. Bovard could have greater influence over how intermediaries are chosen, whether indebted trustees continue receiving cargoes, what payment guarantees they must provide, how overdue proceeds are pursued and how closely oil transactions are supervised.
No such changes were announced with his appointment.
That makes the significance of the reshuffle relatively straightforward to assess. If Iranian terminals resume loading crude and exports to China restart, the decisive factor will probably be a change in the blockade or the wider conflict.
If the ministry changes the way trustees are selected, tightens guarantees, recovers overdue revenues or alters the officials managing sanctioned oil sales, those would be changes Bovard can more directly influence.
Paknejad’s resignation therefore does not by itself explain what is happening to Iran’s oil exports or signal a new policy. Bovard inherits an external constraint he has little power to remove and an internal sales system over which he may have considerably more room to act.
Whether the change at the top matters will depend on which of those problems, if either, begins to change.
"We have reached a point where we hope people don't get sick, because if they do, the end of that illness is not treatment. It is death," Salman Es'haghi, spokesman for parliament's Health and Treatment Committee, told the labor-affiliated news agency ILNA.
The pressure cannot simply be blamed on war and sanctions, Es'haghi said, accusing the authorities of failing to tackle corruption and poor decision-making as households struggle to pay for medicines, equipment and diagnostic tests.
A separate ILNA report from clinics in Tehran found the same thing from the other side: insured patients waiting weeks or months for diagnostic services, or paying privately for tests they could not get through the Social Security Organization, the state insurer that covers most of Iran's workers and retirees.
A couple sells their sheep and their car
Es'haghi described a rural couple who had sold their livestock and their Pride, the cheap Iranian-built car that was for decades the country's most common, after being told the wife needed a heart valve.
"A man and a woman from one of the villages came to see me," he said. "They said they had several sheep and a Pride, and they had sold them because they were told they needed to buy a heart valve for his wife."
The couple paid 13 billion rials for the valve, about $5,000 at Saturday's open-market rate, or six and a half years of the minimum wage, Eshaghi said. They were then told it was unsuitable and that they would need another.
"A suitable, high-quality valve costs close to 42 billion rials," he said, about $16,000, or 21 years of the minimum wage. "Which patient can pay 42 billion rials?"
Many farming families were selling animals, vehicles and other assets to cover both the equipment and the surgery, he said.
"We have unfortunately closed our eyes to our people dying because of a lack of medicine and the high cost of treatment," Es'haghi said.
Insurance leaves patients exposed
Iran's health insurance funds have stopped protecting patients from the cost of care, Es'haghi said.
"Our insurance funds have effectively declared bankruptcy, but they don't say it out loud," he said. "Because they don't acknowledge their own bankruptcy, they have shifted that bankruptcy onto the people."
More than 80 percent of treatment costs are now paid directly by patients, he said, without giving a source for the figure.
ILNA's reporting on the Social Security Organization points the same way. Nearly 9.9 million people insured by the organization in Tehran province have access to just 36 medical facilities it owns, including 16 polyclinics, according to official figures the agency cited. That is roughly one polyclinic for every 620,000 insured people.
Seeing a doctor is only the beginning
For many patients, getting an appointment does not mean they can complete the treatment prescribed.
At the Abureihan Social Security clinic in Tehran, one woman told ILNA that the ultrasound service the clinic once offered had disappeared.
"This place used to have ultrasound, but it hasn't had it for some time, and now I have to pay a huge amount outside," she said.
Another patient said the clinic had no mammography.
A middle-aged woman in severe abdominal pain said she could not afford the imaging and examinations she had been prescribed.
"I am in severe pain, but further imaging, tests and doctors are beyond what I can afford," she said.
She was the household's breadwinner, she said, earning money from weaving carpets while her husband was out of work. When she was referred to another hospital, she learned the care there would not be free either.
"I have to wait until the carpet is sold and I get the money," she said.
Weeks or months of waiting
Patients who stay inside the Social Security system face long queues instead.
Those referred to larger centers such as Milad Hospital, the organization's flagship hospital in Tehran, must often start over, ILNA reported, because diagnostic departments may accept orders only from the hospital's own doctors. That means another appointment, another consultation, and another wait for imaging or tests.
"These appointments are really useful for someone with a chronic illness who needs constant monitoring, not for someone who has an acute problem right now, today," one patient said.
The squeeze is hardest on retirees and lower-income households who cannot turn to private care.
An elderly woman said she kept making the long trip to a Social Security clinic because private doctors were too expensive, even though she still had to get some medicines and tests elsewhere.
"It's crowded, it's far away and getting here is difficult for me, but because the doctors here are good and my treatment costs less, I still come," she said.
'Why don't we import medicine?'
Es'haghi rejected the argument that Iran's medicine shortages can be explained by sanctions and the war.
"Whenever something happens, we say there is a war, there is no medicine, there are sanctions," he said.
Iran should be able to use its relationships with Russia and China to obtain medicines and pharmaceutical ingredients, he said.
"We can import medicine and pharmaceutical raw materials from Russia and China. Why don't we?" he said. "If we are vigilant, if there is the will and if we fight corruption, I can tell you seriously that supplying medicine and pharmaceutical raw materials has nothing to do with the war."
Figures presented at official meetings showed some pharmaceutical and medical equipment companies had sharply increased their profits during the war, he said.
"Why don't they tell these companies that during wartime they should at least accept a minimum profit margin so that people don't face such hardship?"
Inflation deepens the squeeze
The health crisis is unfolding as household purchasing power collapses.
Consumer prices in September were 89.8 percent higher than a year earlier, according to the Statistical Center of Iran, and average inflation over the preceding twelve months reached 73.6 percent. Food and drink prices had already risen 127.5 percent year on year in August.
The rial's fall to record lows has raised the local cost of imported medicines, equipment and pharmaceutical ingredients.
The strain is visible in the volume of demand on a system that cannot meet it. Social Security facilities in Tehran recorded more than 18.1 million outpatient visits in the Iranian year that ended in March, including about 8.5 million doctor consultations and 9.6 million visits for diagnostic and other services.
For poorer patients, each extra appointment means transport costs, lost wages and another delay. The result, ILNA said, is that some workers and retirees are forced to choose between paying privately, waiting, or abandoning part of their treatment.