Iran's oil minister, Mohsen Paknejad, has resigned days after allegations that an intermediary trust selling Iranian oil abroad owed millions of dollars' worth of export receipts to the state. President Masoud Pezeshkian said he had accepted the resignation, which Paknejad attributed to personal reasons.
Economic turmoil and currency collapse
Paknejad's departure comes as Iran grapples with a dire economic situation, including inflation running at 85%. An overall drop in oil receipts has led to a massive shortfall in foreign exchange earnings and one of the biggest drops in the value of the rial since the Iranian revolution in 1979.
The rial is trading more than 10% lower than a month ago, largely due to the US naval blockade preventing Iran from selling oil, the mainstay of government receipts. The dollar traded at 269,000 tomans (a toman is 10,000 rials) this week, a record high, and has risen 12% since 9 September. The minimum monthly wage of 166m rials is worth about $66. Food inflation is 130%.
Oil revenue allegations and inquiry
Iran has been using informal networks known as "trustees" to bypass US sanctions and repatriate oil revenues. A report last week by the Farhikhtegan newspaper alleged that a trust set up on Paknejad's watch to recoup income from Iran's overseas oil sales owed the state-owned National Iranian Oil Company (NIOC) nearly $2bn (£1.5bn) in revenues. Three individual trustees awarded oil contracts allegedly owe hundreds of millions of dollars each to the NIOC.
Reza Sepahvand, a spokesperson for the parliament's energy commission, has announced the launch of an inquiry. Some of the leaks behind the reporting may reflect a power struggle inside the oil industry.
Government response and public pressure
Emergency government meetings over the weekend to combat the crisis have yielded little tangible progress, and there are growing reports that the professional middle class, notably teachers and nurses, are resigning in large numbers because their salaries are not keeping up with price rises. The central bank says its role is not to defend a specific rate, but manage fluctuations.
Iran's economy contracted by 10% in the first three months of the year. Despite concerns that continued sanctions may lead to protests, Iranian diplomats are not planning any new concessions after a proposal to speed the process of nuclear negotiations was rejected by Donald Trump a week ago.
In an attempt to shore up public confidence in the government's strategy, ministers have been seeking to rebut Trump's claim that oil is now flowing through the Strait of Hormuz at near pre-blockade rates. The number of attacks on ships trying to use the strait's southern route close to the Oman shoreline has risen in recent days, including four attacks in the past 48 hours. It was also reported that Saudi Arabia's east-west pipeline had been forced to close again after a further attack.
Reuters reported last week that the seven-day moving average of the region's crude oil exports reached 18.5m barrels a day on 1 October, about the same amount exported before the US-Israeli war with Iran began.
Price controls and wage concerns
Alireza Zakani, the mayor of Tehran, has announced he is freezing the price of 12 basic items including sugar, rice, oil and detergent for six months. There has been scepticism about how these price controls will be enforced, but he claimed the national government was going to study his plan. Ministers also said a second rise in public sector wages is likely.
Mohammad Sharifi Moghaddam, secretary general of the Nurses' House organisation, stressed the scale of the squeeze on living standards: "Nurses have explored all possible avenues – logical, legal, professional, and every type of protest or critical path – to achieve their demands. The current healthcare system has shown no regard for the issues and demands of the nursing community. Nurses have come to the conclusion that it is more cost-effective and less damaging to their wellbeing to stay home and receive a salary of 25m tomans."
At the same time, repression of mainstream dissidents has continued, with the summoning of the leadership of the Reform Front by the ministry of intelligence to explain criticisms it had issued during the crackdown on protests. The front has already written to the government calling for transparency about corruption at a time when people are under such pressure from inflation, high prices and falling living standards.
