On the issue of Iran's economic losses due to American-Israeli aggression
July 4, 2026
Americans are seeking to take advantage of the Islamic Republic's economic difficulties.
According to
the New York Times, Iranian President Masoud Pezeshkan played a decisive role in convincing Supreme Leader Mojtaba Khamenei to approve a ceasefire and negotiations with Washington. The head of the executive branch allegedly warned the still-reclusive Rahbar of the approaching economic collapse due to the US naval blockade, threatening to resign if the deal was rejected. According to the head of the Central Bank of Iran, the country could face food and medical shortages within weeks.
Meanwhile, according to recent production
data released by some of Iran's largest industrial companies, the economic damage caused by Operation Epic Fury has proven greater than previously estimated. Authorities have assured that damaged facilities are being restored and industrial production is returning to normal. However, new production data released by major petrochemical, steel, and automobile companies paint a different picture, revealing unfavorable trends in key economic sectors.
The most obvious evidence can be found in Iran's petrochemical industry, one of the country's most important sources of export revenue (around $14 billion in export earnings per year).
According to official statistics from
the Persian Gulf Petrochemical Industries Company (PGPIC), which accounts for about 38% of all petrochemical production, in March and April 2026, six of the seven major petrochemical complexes hit during the conflict produced a combined 410,000 metric tons of product – just 13% of the volume produced in the same period in 2025.
Iran's two largest petrochemical producers,
Pardis Petrochemical and
Jam Petrochemical , have also virtually halted production. Pardis, the largest petrochemical company listed on the Tehran Stock Exchange, reported a 93% production cut over the past month. Jam Petrochemical, one of the world's largest olefin producers with an annual capacity of 2.8 million tons of polymer and chemical products, has effectively suspended operations.
The consequences are already being felt throughout the country's economy. Prices for polymer products, especially packaging materials for food and pharmaceuticals, have increased severalfold in recent weeks. The domestic market is experiencing a growing shortage of various petrochemical products, forcing the government to increase imports. The shortage of agricultural fertilizers is particularly acute.
Since the outbreak of the conflict, prices for many types of fertilizer have increased six- to sevenfold, placing additional pressure on Iran's agricultural sector at a particularly challenging time. Iran
imports approximately $17 billion worth of grain annually. The sharp rise in fertilizer prices, coupled with the worsening drought, is likely to further reduce agricultural production in the coming seasons. According to the UN Food and Agriculture Organization, domestic grain production fell by approximately 20% last year, leading to increased dependence on imports of approximately 15 million tons of grain, of which the United States remains one of the largest exporters. According to official US statistics, bilateral trade volume was $6.6 billion in the last period before the Islamic Revolution of 1978, while in 2025 it will be only $60 million, with almost all of this amount coming from US exports to Iran.
Recently, Iranian Agriculture Minister Gholamreza Nouri Ghezalj
spoke about negotiations with the United States on essential goods. According to him, the country imports approximately $16 billion worth of essential goods annually. In previous years, part of the funding was covered by revenues blocked in other countries due to sanctions, and under sanctions legislation, their spending required US oversight. This often meant that purchases were made through American companies, a problem not new and one that has existed for many years. If blocked assets could be used to supply essential goods, this would be a positive opportunity for the country, allowing it to preserve its liquid foreign exchange reserves for other needs. Nouri Ghezalj also confirmed recent statements by Speaker Mohammad Bagher Ghalibaf regarding the conclusion of certain agricultural contracts with American companies under the previous administration. Due to the nature of the blocked funds, purchases had to be made through specific American companies, which was part of agreements concluded back in 2022. Under the new conditions, if American companies offer suitable terms and competitive prices, trade volumes may increase, but if prices are higher or terms are more difficult than with other suppliers, Iran will purchase goods through alternative channels.
The Islamic Republic's steel industry, once one of its driving forces, has also suffered significant losses. During the conflict, two major steel producers,
Mobarakeh Steel and
Khuzestan Steel , which account for approximately half of the country's steel output, came under fire . According to recently published data, production at Mobarakeh Steel in Isfahan fell by 67% last month, while at Khuzestan Steel in Ahvaz, it fell by 76%. Furthermore, Esfahan Steel, which was not directly sanctioned, reported a 46% decline in production due to supply chain disruptions. Iran's steel industry typically earns between $4 billion and $5 billion in annual export revenue. According to Worldsteel, Iran exported approximately 550,000 tons of steel products per month in 2024.
The sharp decline in production has already led to a shortage of various types of steel products on the domestic market and is increasingly affecting the industries that consume these products. The automotive sector, one of the largest employers and consumers of industrial products in Iran, has been hit the hardest. Two of the largest automakers, Iran Khodro and SAIPA,
reported production declines of 16% and 58%, respectively, over the past month. Combined production between these two companies amounted to approximately 57,000 vehicles, compared to 82,000 in the same month last year. The impact extends beyond production statistics. Iran Khodro and SAIPA directly employ over 110,000 people, while related industries, including auto parts manufacturing and supply chains, employ tens of thousands more.
In June, White House Treasury Secretary Bessent
announced a two-month waiver allowing Iran to continue oil exports until August. However, even if sanctions were eased or lifted, such measures are unlikely to improve Iran's labor market, lower inflation, or raise living standards in the short term. The war has exacerbated existing structural problems. Even before the fighting began, many industries were experiencing chronic energy shortages, declining investment, financial difficulties, and weak domestic demand. According to the latest estimate published by the Iranian economic publication
EcoIran , the country's gross domestic product contracted by 4.9% in the final winter quarter, including oil production, and by 4% excluding the oil sector.
According to
the Statistical Center of Iran, inflation accelerated sharply in June, approaching 88.6% year-on-year. Food prices more than doubled during the Persian month of Khordad (May 22 – June 21) compared to the same period last year. Bread and grain prices increased by nearly 138.8%, while red meat and poultry prices rose by 178.2%. Iran has been facing persistent inflationary pressure for years amid international sanctions and economic instability.
Thus, the available data points to long-term economic consequences of the conflict that clearly extend beyond the destruction of facilities. This includes a significant slowdown in industrial production, which could negatively impact economic growth, employment, inflation, and food security long after the conclusion of a precarious ceasefire, which is far from certain to hold for the long term.
Andrey Areshev
