Iran: Severe Stress Now, More Risk If Conflict Returns
66/ 100Iran
Summary
Torsten Sløk's three charts tell one connected story: since the conflict began, Iranian consumer inflation has surged to roughly 90% year on year, well above the previous peaks of around 50% in 2019-20 and 2022; the open-market rial has fallen to nearly 3 million per US dollar after a near-vertical slide; and crude exports, Iran's main source of foreign currency, have collapsed from about 1.8 million barrels a day to essentially zero. The mechanism is a feedback loop: lost oil revenue means fewer dollars entering the country, which pushes the rial lower, which raises import prices and feeds inflation, and the loop continues for as long as exports remain shut in.
Highlights
Since the conflict began, Iran has seen inflation near 90%, a collapsing currency and oil exports falling to essentially zero.
Iranian consumer price inflation has surged to roughly 90% YoY, well above the previous peaks of around 50% seen in 2019-20 and 2022.
Lost oil revenue means fewer dollars flowing into the country, which pushes the rial lower, which in turn drives import prices and inflation higher.
Contrarian Viewpoints
- Open-market exchange rates and export estimates during a conflict are noisy, so the precise levels should be treated as indicative rather than exact.
- The 2018-21 precedent, when exports fell to very low levels and then recovered gradually, cautions against assuming essentially zero exports persist indefinitely.
Investment Implications
- Underweight assets dependent on Iranian oil supply while exports remain near zero; a resumption of exports would be the key signal to reassess.