Tehran’s streets have become a battlefield of patrols, propaganda and despair, and the economic fallout is now unmistakable. Within weeks of the 28 December 2025 shop‑keeper strikes, Iran’s real GDP has swung from a fragile near‑zero growth outlook to a 1.7 % contraction in 2025, with the World Bank forecasting a further 2.8 % decline in 2026. At the same time, crude‑oil exports have slipped by roughly 100 000 barrels per day – a 5 % reduction that has sent risk premiums on Iranian crude soaring and pushed Brent futures up by almost twenty points since the start of the year.

The protests, sparked by soaring inflation, a collapsing rial and chronic food‑price spikes, quickly spread beyond Tehran, prompting a heavy security presence that has stifled commercial activity. The macro‑environment was already precarious: the rial lost 84 % of its value over the previous twelve months and food inflation reached 72 % annually. These pressures eroded household consumption, a key driver of growth, and amplified the impact of a twelve‑day conflict with Israel that disrupted oil production.

In the pre‑protest period, Iran’s economy was already teetering. IMF estimates placed 2024 growth at 3.7 %, but forecasts for 2025 had been trimmed to a meagre 0.3‑0.6 %. Oil exports, once rebounding to about 2 million barrels a day after the 2018 JCPOA relief, had stabilised at that level by early 2025. The unrest, however, introduced a new shock. A Reuters survey recorded a drop of roughly 100 000 barrels per day in late 2025, directly cutting government revenue. While official figures for early 2026 show no further decline, BloombergNEF notes that market‑risk premiums have risen sharply, reflecting investors’ fear of renewed disruptions.

The contraction in output is reflected in the World Bank’s assessment that the economy shrank by 1.7 % in 2025, a reversal driven by lower domestic consumption and interrupted oil flows. The forecast for 2026, a further 2.8 % contraction, underscores the depth of the crisis. Sanctions, already tightening after the Israeli confrontation, have compounded the fiscal strain, while the government’s heavy‑handed response – mass patrols and state‑run propaganda – has done little to restore confidence.

For Iran’s oil sector, the 5 % dip in exports may appear modest, yet the broader implications are severe. The reduction translates into billions of dollars of lost revenue at a time when the state relies heavily on oil to fund subsidies and debt service. Moreover, the heightened Brent risk premium signals that global markets now price Iranian crude as a high‑risk asset, potentially discouraging foreign investment and further isolating the country’s energy industry.

In sum, the protests have accelerated a slide that was already underway. The twin blows of a contracting GDP and shrinking oil exports illustrate how political unrest can quickly translate into macro‑economic distress, especially in a sanctions‑laden economy. Tehran’s authorities face a stark choice: quell dissent through force and risk deepening economic isolation, or pursue reforms that could stabilise the rial, tame inflation and restore confidence in the oil sector. The path they choose will shape Iran’s fiscal health for years to come.

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