Tehran’s high-tech oil vision clouded by old problems

Then, as now, Iran faced a grinding impasse: Supreme Leader Ruhollah Khomeini resisted UN Resolution 598 which called for an end to hostilities until the cost of defiance became unbearable.

The resolution, passed on July 20, 1987, demanded a ceasefire, prisoner exchanges and a return to recognized borders.

Saddam Hussein accepted immediately. Khomeini refused, vowing that “the war should continue until the end of all seditions in the world.”

Washington warned of sanctions, and then-President Ali Khamenei told the UN General Assembly Iran was “determined to punish the aggressor.”

‘Poison chalice’

The war dragged on another year, draining finances and costing thousands more lives.

By August 1988, even then-Revolutionary Guards commander Mohsen Rezai conceded it was unsustainable. Morale had collapsed, tens of thousands were dead and Iran’s military capabilities shattered.

Khomeini finally relented, confessing that accepting Resolution 598 was “more deadly than drinking from a poisoned chalice.”

The phrase became a metaphor for concessions made too late, when pride collides with reality.

That poisoned chalice haunts Iran again.

No turning back

After the 12-day war with Israel, many in Tehran urged the leadership to abandon uranium enrichment and open direct talks with Washington, arguing only such a step can relieve Iran’s economic misery.

Yet Khamenei remains unmoved, caught between hardliners demanding defiance and moderates pleading for pragmatism.

Fond of channeling his predecessor, Khamenei had likened agreeing to a 2015 nuclear deal as drinking from that same poison chalice.

The IAEA continues to demand answers on uranium reserves. The Trump administration insists Iran’s nuclear program has been dismantled and warns against escalation.

Israel, emboldened by its strikes on Tehran and regional proxies, demands not only an end to Iran’s missile program but at times even regime change. Europe has its own conditions for halting or delaying the snapback of sanctions.

'Slap in the face'

On Tuesday, on the eve of President Masoud Pezeshkian’s address to the UN General Assembly, Khamenei poured cold water on any hope of reconciliation, effectively torpedoing the president’s diplomatic message before it was delivered.

Doubling down on a red line, he declared: “Negotiating with the United States under the current conditions carries harms for Iran, some of which are irreparable ... This is not negotiation, this is dictation.”

Hours earlier, Trump had mocked him at the UN as Iran’s “so-called” Supreme Leader. Khamenei shot back that Iranians would “give a slap in the face to the person" making arrogant demands of Iran.

Inside Iran, moderates call for dialogue, while hardliners close to Khamenei, including the editor of the state-funded Kayhan newspaper, deride them as “kissing Trump's bottom.”

The result is paralysis.

For Khamenei, the options appear stark: war or negotiation. A years-old quote of his "neither war nor negotiation" was not long ago plastered as a mural on a Tehran high-rise. But history suggests delay carries its own cost.

In 1988, the poisoned chalice was forced upon Khomeini only after Iran’s military was exhausted, its economy shattered, and its people demoralized.

Today, the risk is that Khamenei repeats the same mistake—clinging to defiance until the only choice left is abject humiliation.

Speaking at a meeting with the National Entrepreneurs Assembly, Farzin said the Central Bank of Iran (CBI) has “full security and access” to reserves held abroad and is preparing special measures to support exporters, ease access to hard currency and expand financing channels.

He announced plans for up to €200 million in sukuk Islamic bonds, new credit for export-oriented firms and a joint committee with entrepreneurs to resolve banking hurdles.

Farzin stressed that the CBI’s priority is to curb inflation and maintain financial stability, pledging that “all monetary and foreign exchange decisions will be taken with these objectives in mind.”

• 

  Iran moves to curb media reports that could fuel panic over UN sanctions

He also said the bank has introduced new instruments such as chain financing, gold-backed bonds and pre-sale of foreign currency to increase resilience in the market.

The remarks come as Iran braces for the automatic return of UN sanctions on September 28 after Britain, France and Germany triggered the mechanism last month.

• 

  Sanctions snapback augurs deeper pain for Iran's ailing economy

The snapback would reinstate international restrictions suspended under the 2015 nuclear deal, compounding existing US and EU sanctions that have already slashed oil revenues and battered the rial.

Iran’s currency has tumbled past 1,038,000 rials per dollar on the open market, while inflation hovers near 50%.

• 

  'All engines of Iran’s growth have stopped' - Iranian business newspaper

• 

  Iranian youth facing chronic anxiety as living costs climb - Tehran daily

Analysts warn that renewed sanctions could push inflation above 60–90% and deepen negative growth.

Despite official assurances, businesses say access to foreign exchange remains a critical obstacle, with many entrepreneurs urging structural reforms and clear rules for investors.

The central bank’s confidence message contrasts with mounting signs of distress, including protests over living costs, reports of suicides linked to financial hardship and warnings from experts that Iran’s energy and fiscal systems are at breaking point.

When Iranian President Masoud Pezeshkian took the podium at the United Nations General Assembly last year, he presented himself as a reformist leader promising “national empathy,” constructive global engagement and an end to conflict through dialogue.

In his 2024 speech, Pezeshkian denounced Israel over its war in Gaza, accused it of genocide, and called for a referendum allowing all Palestinians -- Muslims, Christians and Jews -- to decide their future.

He stressed that Iran had never initiated a war and sought lasting peace and stability in the Middle East, while condemning US sanctions as “inhumane weapons” against the Iranian people.

He also urged full implementation of the 2015 nuclear deal, from which Washington withdrew in 2018, warning that Donald Trump’s so-called maximum pressure only deepened insecurity. “If JCPOA commitments are implemented fully and in good faith, dialogue on other issues can follow,” he told delegates, signaling openness to diplomacy.

100%

A year later, Pezeshkian returns to New York under far darker circumstances.

In June, Israel fought a 12-day war with Iran, ending in US strikes that wrecked several of Tehran’s key nuclear sites. Iran says much of its enriched uranium stockpile now lies buried under rubble.

Months before the Iran-Israel war, the UK Parliament’s House of Commons Library said in a January 2025 report that Tehran’s regional alliances were already weakened. It said Hamas and Hezbollah had lost leaders in Israeli strikes, while Syria’s Assad government collapsed in December, leaving Iran’s network of partners militarily diminished.

Following the conflict, the European parties of the 2015 nuclear deal activated a 30-day “snapback” process at the United Nations, due to reimpose sanctions on September 28, and stoked debate in Tehran over leaving the Nuclear Non-Proliferation Treaty.

While IAEA chief Rafael Grossi says cooperation with inspectors has not been officially suspended, he acknowledged “different voices” in Iran calling for such a step.

The standoff has left diplomacy on a knife edge, with Western envoys pressing Tehran to allow inspections and restore trust as sanctions loom.

As Pezeshkian prepares to deliver his 2025 address on Wednesday, he faces mounting economic strain at home, international isolation and speculation over whether he will soften or harden Iran’s stance in the wake of war.

The report on consumer behavior showed a surge in demand for a range of health-related products during the war, including sanitary pads, disinfectants, blood glucose test strips, medical bandages, nail extension supplies, blood glucose monitors, adult diapers, and sanitary underpads.

The report comes three months after Israel launched a surprise military campaign on June 13, striking military and nuclear facilities in Iran. Air attacks killed nuclear scientists along with hundreds of military personnel and civilians. Iran retaliated with drone and missile attacks which killed 31 Israeli civilians and one off-duty soldier.

The United States joined the conflict on June 22, conducting strikes on major nuclear sites including Fordow, Natanz and Isfahan, before brokering a ceasefire on June 24.

Global perspective

Similar spikes in condom sales have been reported in other countries during times of conflict or crisis. After North Korea’s nuclear test in October 2006, South Korean convenience stores recorded a surge, with condom sales averaging 1,930 per day, compared to about 1,508 per day previously.

In Russia, following the invasion of Ukraine in March 2022, major retailers reported sharp increases. The pharmacy chain Rigla noted a 26% rise, while online marketplace Wildberries saw sales climb by about 170% year-on-year, a surge linked to consumer fears of shortages and price hikes.

Similar behavior was documented in the United States during the early months of the COVID-19 pandemic, when condom makers such as Reckitt Benckiser reported sales jumps linked to consumer uncertainty and supply chain fears but not necessarily increased use.

Between April and August 2025, exports dropped by 40%, continuing a downward trend that began in 2024, according to financial intelligence platform Zawya.

“Iran’s exports to Iraq in the first five months of this year decreased by 18% compared to the same period last year, with a significant portion of the decline due to gas exports,” Abdulamir Rabihavi, Director General of the West Asia Office at Iran’s Trade Promotion Organization, said on September 15.

“In the first five months of last year, we exported around $1.6 billion worth of gas to Iraq, but this has fallen to $950 million this year," he was quoted as saying by Iran's Etemad newspaper.

Iraq’s imports have been constrained by stepped-up United States sanctions. In March 2025, the Trump administration revoked a waiver that allowed payments for Iranian electricity imports as a long-standing carve out to broad US sanctions on Tehran.

Baghdad seeks to diversify supplies by launching a new gas import line from Turkmenistan. However, because the pipeline runs through Iran, it remains subject to US sanctions, and Washington has refused to grant Iraq a waiver.

“The entry of new competitors and possible shifts in Iraq’s market require constant monitoring and preparedness by economic actors,” Etemad newspaper quoted Yahya Al-Ishaq, President of the Iran-Iraq Chamber of Commerce, as saying.

Hamid Hosseini, a member of the Iran Chamber of Commerce, noted: “One of Iraq’s main policies in recent years has been to support domestic production. The government regularly raises import tariffs, sometimes up to 36%.”

Despite holding vast natural gas reserves, Iraq lacks the infrastructure to fully utilize them and continues to depend on imports.

The country does not have enough refineries to process associated gas from its oil fields and still flares a large portion of it.

The US maximum pressure campaign on Iran, reinstated by President Trump in February 2025 via a National Security Presidential Memorandum, aims to deny Tehran nuclear weapon paths and counter its regional influence through sweeping sanctions on its energy sector, including oil exports targeted at zero.

The policy has blocked waivers for third-country energy deals involving Iran, directly curtailing Tehran's gas and electricity flows to Iraq and exacerbating domestic shortages.