Oil, gas and Iran economic analyst
For years, Iranians have turned to gold to protect their savings from the relentless depreciation of the rial. Now, as war and soaring living costs deepen the economic crisis, some are selling those holdings to pay for everyday necessities.
The World Gold Council (WGC) said demand for gold bars and coins in Iran fell by more than half to 5.6 tonnes in the third quarter of 2026 compared with a year earlier.
“The war continued to disrupt daily life, and prompted some selling of bars and coins to cover living and relocation costs,” the report said.
Overall, Iranian demand for gold bars and coins reached 19.1 tonnes in the first nine months of 2026, down from 36.2 tonnes in the same period last year, a decline of approximately 47%.
“Iranian demand declined 17% to 5.4 tonnes as the ongoing war strained consumer sentiment and disrupted daily life,” the WGC said, referring to gold jewellery.
Jewellery purchases totalled 15.8 tonnes in the first nine months of 2026, compared with 21 tonnes in the same period last year.
An economy under strain
The decline comes amid a sharp depreciation of Iran's national currency and soaring gold prices. The rial has lost approximately 60% of its value against the US dollar over the past year.
Meanwhile, the price of the Bahar Azadi gold coin has surged by 141% over the past 12 months, putting new purchases increasingly beyond the reach of many households.
Years of US sanctions have restricted Iran's oil exports, access to international banking and foreign investment, depriving the economy of revenue and putting sustained pressure on the rial.
Decades of economic mismanagement, widespread corruption and inefficient state-dominated industries have compounded the damage, fuelling inflation and undermining living standards.
Official data from Iran's Statistical Center show that food inflation surged to nearly 123% last month, while prices for water, electricity and fuel almost doubled compared with October 2025.
The deteriorating economic situation has also been accompanied by job losses and a slowdown in business activity.
Wages fall behind living costs
Seyed Malek Hosseini, deputy minister for entrepreneurship development and employment at the Ministry of Cooperatives, Labour and Social Welfare, recently said around 500,000 jobs had been lost last year.
He added that a further 1.2 million to 1.4 million jobs had been lost following the latest war, which began on February 28. Hosseini put the country's current employed population at 23.5 million.
The financial pressure on Iranian households is also evident in the widening gap between wages and the cost of living.
Reuters recently reported that official estimates put the minimum monthly cost of living for a three-person working-class family at around $336, more than three times the average monthly wage of approximately $92 at the free-market exchange rate.
“As wages fail to keep pace with inflation, many families have exhausted savings, cut consumption or borrowed money to cover daily expenses,” Reuters reported.
For some Iranian households, gold is no longer simply a safeguard against the rial's collapse. It has become a way to pay for everyday necessities.
Iran may be able to repair much of its war-damaged energy infrastructure without new Western technology. Whether it can rebuild a modern, reliable energy industry is another question.
Successive rounds of US and Israeli strikes have damaged oil storage facilities, gas-processing plants and petrochemical infrastructure.
Iranian engineers, supported by suppliers from China and Russia, may be able to restore substantial capacity.
But sanctions, limited investment, ageing equipment and the threat of further attacks complicate the prospects for lasting recovery.
Satellite analysis by the Conflict and Environment Observatory (CEOBS) following the June 14, 2025 attacks confirmed the destruction of four storage tanks at Tehran's Shahran depot.
The same analysis documented damage at South Pars Phase 14, where Iranian state media reported a temporary halt to 12 million cubic metres of daily gas production.
Further attacks in March 2026 damaged oil storage facilities at Shahran, Aqdasieh and Karaj, as well as the Tehran refinery site, according to CEOBS.
The International Energy Agency also identified damage to South Pars gas-processing facilities following strikes on Asaluyeh.
Petrochemical infrastructure suffered additional damage. Industry publication ICIS reported that April 4 strikes hit the Fajr 1 and Fajr 2 utility plants in Mahshahr, while the Bandar Imam complex sustained partial damage.
The Fajr facilities supply essential utilities to other industrial plants, meaning damage to them can disrupt production well beyond the immediate impact sites.
Challenges ahead
Some recovery has already been reported. On September 23, Reuters cited an Iranian official as saying that half the damaged South Pars capacity had been restored, although independent verification remained limited.
Iran has considerable domestic engineering expertise. Local contractors have continued developing oil and gas fields despite sanctions, while engineers at MAPNA have reported successful tests of upgraded heavy-duty turbines.
But repairing the physical damage caused by war is only one of the challenges facing an industry already struggling with years of underinvestment and restrictions on access to specialised technology.
As gas reservoirs mature, declining pressure can reduce production unless additional compression equipment is installed. Maintaining output therefore requires investment even at facilities that have escaped military attacks.
The problem is particularly acute at South Pars, the vast gas field shared with Qatar.
According to the US Energy Information Administration (EIA), the withdrawal of foreign partners disrupted plans for offshore compression at South Pars Phase 11.
The gap is even more pronounced in liquefied natural gas (LNG).
Iran has long sought to develop LNG exports, but sanctions-related technology restrictions have helped stall those ambitions, according to the EIA.
Restoring damaged gas-processing equipment could help recover domestic supplies. It would not, however, create a competitive LNG export industry, which requires specialised liquefaction technology, financing, shipping arrangements and long-term customers.
Moscow and Beijing to the rescue?
China and Russia offer potential alternatives to Western suppliers, but neither can be assumed to finance or rebuild Iran's energy industry on the scale required.
China is a major buyer of Iranian oil and could provide equipment, engineering services and project financing. Yet purchasing discounted crude does not necessarily translate into a willingness to undertake expensive, long-term infrastructure projects.
The EIA has documented the withdrawal of China's CNPC from South Pars Phase 11 after US sanctions were reimposed. Chinese companies considering new projects must still assess payment security, access to equipment and the returns available from investments elsewhere.
Russian assistance faces similar constraints.
A $40 billion memorandum of understanding signed between Gazprom and the National Iranian Oil Company in 2022 raised expectations of extensive Russian involvement. But the Congressional Research Service has questioned Russia's financial resources and commercial interest in expanding Iranian gas exports.
Reconstruction depends not on the value of memoranda but on financing secured, equipment delivered and facilities brought back into operation.
Damage, repair, repeat
Sanctions and restrictions on international payments limit Iran's access to foreign capital and imported equipment, while disruptions to oil exports further constrain the revenues available for reconstruction.
Even where Iran has the money and technical capacity to rebuild, the possibility of renewed military attacks creates another obstacle.
Although President Donald Trump has expressed skepticism about renewed strikes, US and Israeli planners have reportedly considered further attacks on Iranian petrochemical facilities.
The possibility of renewed strikes complicates long-term reconstruction. Companies may be reluctant to finance projects, supply specialised equipment or deploy personnel to facilities that could be attacked again.
This makes reconstruction priorities particularly important. Restoring gas treatment facilities and shared industrial utilities may bring multiple downstream operations back online, while repairing an isolated export facility may offer limited benefits if its supply connections remain disrupted.
Recovery timelines will also vary considerably. Some damaged units could restart within weeks or months if equipment is available, while major replacements and technological upgrades may take years.
Iran's engineers and its Chinese and Russian partners may be able to restore much of the damaged infrastructure.
But without sustained investment, specialised technology and protection against further attacks, Tehran risks becoming trapped in a cycle of destruction and repair rather than achieving lasting recovery.
Iranians responding to an Iran International appeal said they could not afford emergency supplies or had nowhere safe to go if wider war resumes with the United States and Israel, with others describing exhaustion after repeated rounds of fighting.
Iran International asked its Instagram followers whether they would prepare emergency kits in the event of another war, drawing around 4,000 replies, many of which cited poverty, rising prices and a lack of public shelters.
Others described growing exhaustion after the 12-day war in June 2025 and the 40-day conflict from February to April 2026, both involving the United States and Israel, as well as decades of political and economic uncertainty.
The responses come after The Atlantic reported last month that the Trump administration was considering renewed strikes on Iran following the US midterm elections, with energy infrastructure among the potential targets.
Some respondents said they would not prepare emergency supplies, although their reasons varied.
‘We buy yogurt in four installments’
Financial hardship was a recurring reason cited by respondents, many of whom said meeting everyday needs had become difficult, let alone stockpiling food, medicines and emergency equipment.
"We buy yogurt in four installments, and then they expect us to stockpile three months' worth of food!" one respondent wrote.
Several Iranians pointed to the considerable cost of putting together even a basic emergency kit containing a flashlight, radio, canned food and other essential supplies.
"Putting together this bag costs 200 million rials [about $73]. Where are we supposed to get that money?" another respondent said.
One person questioned how anyone earning 250 million rials ($91) a month could afford an emergency kit costing at least 150 million rials ($55).
Another estimated the cost of a kit at nearly 300 million rials ($109), saying it was difficult for people who could not afford food for the following day.
The concerns reflect a broader cost-of-living crisis in Iran.
Iran's Statistical Center reported that point-to-point inflation, which compares prices with the same month a year earlier, reached 88.7% in the Iranian month of Mehr, which ended in October.
"We have no money, we're unemployed, and even covering the cost of daily food has become difficult," one respondent said.
Some said they could afford only a few basic items.
"Only things like sanitary pads, pills, tissues and biscuits. I can't afford the rest," one person wrote.
Others said they intended to prepare emergency kits despite the costs, particularly because of concerns about prolonged disruptions to water, electricity and gas supplies.
Several respondents with cardiovascular conditions, diabetes or epilepsy said they had stockpiled several months' worth of essential medication.
‘Where are we supposed to go?’
A lack of safe shelter was another major concern among respondents, with some questioning the purpose of preparing emergency supplies when they had nowhere to escape to.
"Even if we pack a bag, where are we supposed to go? The main question is, where do we go?" one person wrote.
Another said sarcastically: "During a war, all I can do is move from one room to another."
The shortage of public shelters has been acknowledged by Iranian officials.
On September 15, Tehran City Council Chairman Mehdi Chamran said metro stations should be equipped to serve as emergency shelters. He had previously acknowledged that the capital lacked fully equipped and ready-to-use shelters for residents.
Some respondents questioned whether emergency supplies would make any meaningful difference if strikes damaged essential infrastructure, leaving households without electricity, running water or gas for extended periods.
"If they strike the infrastructure, what can you possibly do with a backpack that, at most, can get you through one week?" one wrote.
Iran’s First Vice President Mohammad Reza Aref said on September 27 that damage to gas infrastructure during the two recent wars had reduced supplies, adding to the country’s energy shortages.
‘Our entire lives have been a state of emergency’
Beyond financial hardship and the lack of shelter, many responses reflected psychological exhaustion and a growing sense of resignation after repeated conflicts.
Some joked that preparing emergency kits was something only people experiencing war for the first time would do.
"It was only during the 12-day war that the anxiety felt new," one respondent wrote.
Another recalled preparing supplies during the first conflict but gradually abandoning the effort.
"We only packed one the first time. Then we needed our belongings and kept taking them out of the bag. The second time, we just entrusted ourselves to God," the respondent said.
Iran International documented similar sentiments in a June 8 report, when respondents described exhaustion with war, economic pressures and uncertainty about the future.
Despite concerns about the consequences of further fighting, some expressed hope that another conflict could bring political change.
That contradiction was also evident in the latest responses, with some saying they no longer feared renewed war and were instead waiting for it to begin.
"Now I'm more stressed about the possibility that war might not happen," one person wrote.
Others spoke of growing fatigue with the uncertainty surrounding the country's future.
Several respondents blamed the Islamic Republic for keeping Iran in what they described as a state of "suspension and crisis," "constant anxiety" and "living on red alert" throughout its 47 years in power.
One respondent summed up the sentiment shared by many: "Our entire lives have been in a state of emergency."
Qatar is securing long-term supplies of US liquefied natural gas to protect revenues against disruptions in the Strait of Hormuz, while pursuing mediation between Tehran and Washington to end the war.
The country’s dependence on the waterway leaves its gas industry exposed to prolonged shipping disruptions. For state-owned QatarEnergy, buying supplies produced outside the Persian Gulf offers a way to earn trading income when its own exports are constrained.
The new contracts will begin delivering in 2030 or later. They offer protection against future losses, but cannot restore shipments from Qatar’s damaged facilities or reopen its export route.
The risks were underscored on Friday, when a Qatari LNG carrier was struck by “unidentified objects” in the Persian Gulf, the same day Qatari mediators held talks in Tehran aimed at reaching a deal between Iran and the United States.
The Al Mayeda was hit Friday evening, its owner Nakilat said Sunday. No crew members were injured or environmental damage reported, and the vessel remained operational.
Qatar condemned the attack as a “dangerous act” threatening maritime navigation and global energy supplies, saying investigations were underway to identify those responsible.
War exposes Qatar’s dependence on Hormuz
Qatar is particularly vulnerable to disruption in the Strait of Hormuz. LNG accounts for half of its foreign-currency export revenues, and shipments to markets beyond the Persian Gulf must pass through the waterway.
Unlike some neighboring oil exporters, Qatar has no pipeline route capable of replacing those shipments. Its oil exports amounted to just 530,000 barrels per day last year, leaving its foreign-currency revenues largely dependent on gas.
According to official Qatari government statistics, the country exported 79 million tonnes of LNG last year, supplying 17% of global LNG consumption. Another 20 billion cubic metres of natural gas, equivalent to approximately 15 million tonnes, was delivered to the UAE and Oman through the Dolphin pipeline. By volume, LNG accounted for nearly 84% of Qatar’s total gas exports.
Qatar was forced to almost completely halt LNG exports for three months starting in March, with shipments gradually recovering from June. According to Kpler data, however, it exported only 4.58 million tonnes in the third quarter, less than a quarter of the volume recorded a year earlier.
September exports reached 1.6 million tonnes, the highest monthly level since the war began. That was still less than a quarter of the pre-war monthly average, with around one-third of shipments going to Kuwait and remaining within the Persian Gulf.
Damage to infrastructure has also been substantial. Iranian missile strikes in March damaged Ras Laffan’s liquefaction units, known as trains, 4 and 6, knocking 12.8 million tonnes of annual capacity offline—about 17% of Qatar’s pre-war capacity.
Energy Minister and QatarEnergy chief executive Saad al-Kaabi initially estimated repairs would take three to five years. In an October 29 interview with Reuters, he put the repair period at about three years.
QatarEnergy has extended force majeure on deliveries to Italy’s Edison until the end of December, the Italian company said on October 27. Shipping has also come under attack: in July, the LNG carrier Al Rekayyat was struck while transiting the Strait of Hormuz.
Qatar has ruled out a pipeline bypass on commercial and technical grounds. Kaabi said in September that transporting gas to another coast would require new liquefaction facilities, duplicating infrastructure already being built in Qatar. He has also warned that pipelines and associated facilities could themselves become targets.
US supplies offer protection against lost revenue
Qatar’s overseas investments predate the war, but its latest purchase agreements form part of a strategy to protect income against future shipping disruptions.
The first major overseas source is the Golden Pass LNG project in Texas. QatarEnergy owns a 70% stake, while ExxonMobil holds the remaining 30%. LNG production began on March 30, 2026.
The project has a total planned capacity of 18 million tonnes per year, giving QatarEnergy an equity share equivalent to 12.6 million tonnes of annual capacity once fully operational. The first train has a capacity of approximately 6 million tonnes per year, of which QatarEnergy’s share is 4.2 million tonnes.
The second element is long-term purchases from US producers. QatarEnergy signed two agreements with Cheniere Energy on October 22 to purchase a combined 4 million tonnes annually, split equally between its Sabine Pass terminal in Louisiana and Corpus Christi terminal in Texas.
Deliveries will begin in the early 2030s and continue through 2054. One million tonnes of the annual Sabine Pass supply is conditional on a final investment decision for an expansion project.
A week later, QatarEnergy signed a 20-year agreement to purchase up to 3 million tonnes annually from Woodside’s Louisiana LNG project. QatarEnergy expects deliveries to begin in 2030, with volumes increasing as additional production units start operating.
Together, the agreements provide for up to 7 million tonnes annually.
The Cheniere purchase price is linked to the US Henry Hub gas benchmark, plus a fixed fee. Both companies’ agreements provide for free-on-board deliveries, meaning QatarEnergy arranges transportation.
Lower US gas prices can create opportunities for profitable sales into Europe and Asia, although returns depend on liquefaction fees, shipping costs and destination-market prices.
Kaabi told Reuters the purchases were intended to generate revenue during future Hormuz disruptions. He cautioned that US cargoes could not simply replace supplies under existing long-term contracts specifying particular export terminals and destinations.
QatarEnergy is also negotiating with Venture Global. Kaabi said he expected further 20- to 25-year supply agreements with US and other producers before the end of 2026.
Qatar has overseas options Iran lacks
Iran’s own gas sector is also under pressure, but it has far fewer options to offset damage through foreign investment and overseas projects.
According to the National Iranian Gas Company, attacks in March knocked around 230 million cubic metres per day of production capacity offline at four gas processing plants. Approximately 100 million cubic metres has since been restored.
That leaves around 130 million cubic metres per day unavailable, equivalent to about 16% of last year’s daily production. Iran already faces substantial gas shortages during colder months, and the company has warned that around 11 provinces could experience supply problems this winter.
Iran’s financial capacity to rebuild damaged infrastructure is limited, while foreign participation in its energy projects is virtually nonexistent. Qatar has substantially greater financial resources to repair its damaged LNG trains and invest overseas.
Those differences do not establish how long Tehran can sustain disruptions to shipping. They do, however, give Qatar more commercial options for managing the consequences.
QatarEnergy’s equity share of Golden Pass will represent 12.6 million tonnes of annual capacity once all three trains are operational, while the Cheniere and Woodside agreements provide for purchases of up to another 7 million tonnes annually.
Those volumes will become available gradually and remain modest compared with Qatar’s pre-war annual capacity of 77 million tonnes and its planned expansion to 142 million tonnes by 2030.
Overseas trading can help cushion the financial impact of disruption. But repairing Qatar’s production facilities and securing passage through Hormuz remain essential to restoring its own exports.
People across Iran say they are struggling to afford food, clothing and rent, while others face unpaid wages and falling business sales, according to messages sent to Iran International as year-on-year inflation hit 88.7% in October.
Messages describe mounting financial pressures on workers, pensioners, students, single mothers and small business owners, with some unable to meet basic needs and others facing unpaid wages and declining sales.
"I went to buy a piece of flat bread. All I got was a piece the size of my palm for 400,000 rials. I don't know how we're supposed to live," one resident wrote.
Iran's minimum monthly wage for 2026 was set at approximately 166 million rials ($61 at the current exchange rate of 2.72 million rials per US dollar).
A pensioner said their monthly income was insufficient to cover even 10 days of living expenses, illustrating the widening gap between household earnings and everyday costs.
Iran's annual inflation rate reached 76.8% in October, with prices rising 4.4% from the previous month, according to figures released by the Statistical Center of Iran.
The 88.7% year-on-year inflation rate means households had to spend an average of 88.7% more than in October 2025 to purchase the same basket of goods and services.
Food prices hit small businesses
Rising food prices have affected not only consumers but also small businesses facing a sharp decline in demand.
"Before the war, I used to sell 70 chickens every day, but because of rising prices, daily sales have dropped to 12," the owner of a poultry and egg shop in Tabriz told Iran International.
The decline represents an approximately 83% reduction in the number of chickens sold daily, reflecting the impact of inflation and weakened consumer purchasing power.
Families struggle with school and clothing costs
The rising cost of education has added to the financial burden on families, with students describing difficulties obtaining basic school supplies.
"I need stationery to study, but prices have risen so much that I can't even afford a notebook," one student wrote to Iran International.
Education recorded the highest monthly price increase among major household expenditure categories in October, rising 23.5%, according to the Statistical Center of Iran.
A mother in Mashhad said she visited a discount clothing store to buy warm clothes for her daughter but found that a hoodie and trousers cost 35 million rials ($13).
Unpaid wages compound housing pressures
Alongside inflation, delayed salary payments have deepened financial difficulties for workers already struggling with rent and family expenses.
An employee of Atlas Air said outstanding wages had not been paid, leaving the family struggling to meet its financial obligations.
"We are tenants, and we also cover the expenses of our family and our parents," the employee wrote to Iran International.
A woman who heads her household and works in the oil industry's healthcare sector said her salary had not been paid by October 29. Officials attributed the delay to a shortage of funds, she added.
Economic hardship has intensified alongside currency depreciation, inflation and declining purchasing power, while the Islamic Republic continues to pursue a confrontational foreign policy, particularly toward the United States and Israel.
Young Iranians are turning from opium, their parents’ drug, to cannabis, methamphetamine and a widening range of synthetic substances, treatment specialists and officials say, as unemployment, hardship and uncertainty about the future reshape the country’s drug use.
Opium is still common among older users, Tejarat News reported. The younger generation’s drugs go by other names: cannabis, known locally as gol (bud), and methamphetamine, known as shisheh (glass).
In July, the head of prevention at Iran's Drug Control Headquarters, Zahra Abedini, said the highest prevalence of drug use was among people aged 24 to 35.
She estimated the prevalence of drug use among university students at between 2.5 and 2.7 percent, although the figures were based on existing studies. A new nationwide survey is underway to provide updated data on addiction in Iran.
Kamran Fateh, an addiction specialist, told Tejarat News that drug consumption should not be viewed simply as a matter of personal choice.
Behind many cases of drug use lies a combination of social, economic and psychological factors, he said.
"A young person facing anxiety, unemployment, a sense of having no future, emotional setbacks, economic pressure or family tensions may look for a quick way to temporarily escape those pressures," Fateh added.
Cannabis use and the changing drug market
The Drug Control Headquarters' director of treatment has identified cannabis and hashish as among the country's most commonly consumed substances, warning about the rapid emergence of synthetic drugs and new psychoactive compounds.
One concern highlighted in the report is the growing normalization of cannabis use among young people, some of whom regard it as less dangerous than traditional narcotics or believe occasional consumption carries little risk of dependence.
Fateh warned that misconceptions about the safety of certain substances were among the biggest obstacles to prevention.
"When a substance is described as 'recreational,' 'herbal' or 'less harmful,' people's awareness of the risk of dependence decreases," he said.
Addiction treatment specialists in several provinces have reported cases of young people beginning with cannabis before experimenting with other substances, although such progression is not inevitable.
According to prices reported by addiction treatment specialists, a cannabis cigarette costs around 1.5 million rials ($0.55), while methamphetamine sells for approximately 2.5 million to 7 million rials ($0.92 to $2.59) per gram.
Heroin prices range from 2 million to 7 million rials ($0.74 to $2.59) per gram, compared with 1.21 million to 3 million rials ($0.45 to $1.11) for opium. The figures are estimates rather than official market rates.
Experts have also warned that newly emerging substances are increasingly marketed with claims of reducing stress, boosting energy, improving concentration or promoting weight loss.
Economic hardship and uncertainty fuel vulnerability
Fateh said the expanding illegal drug market was making prevention increasingly difficult as suppliers introduced new substances and combinations to meet changing demand.
He also said that families sometimes discover drug use only after occasional consumption has developed into a more serious problem, adding that punishment and intimidation are not necessarily effective responses.
"If society focuses only on 'saying no to drugs' but offers no solutions to problems such as unemployment, social isolation, depression, identity crises, economic pressure and a lack of healthy recreational activities, many of the underlying causes of drug use will remain," he said.
Fateh highlighted the relationship between economic hardship and addiction, saying that rising drug prices could drive dependent users toward cheaper, unfamiliar or more dangerous substances.
"If a dependent person does not have access to effective, affordable and accessible treatment, higher prices may even push them toward more dangerous alternatives," he said.
He argued that enforcement measures against drug suppliers alone would not resolve Iran's addiction problem without addressing the broader economic and social pressures facing younger generations.
