Iran's Geopolitical "Gray Rhino": Which Prices Are Affected?

Report Summary

The unrest in Iran seems to have subsided, but the geopolitical risks of the "gray rhino" remain. This report mainly outlines Iran's basic economic conditions, focusing on natural resources, advantageous industries, and export structure.

1. What has happened recently in Iran?

Economic difficulties have triggered protests across the country, gradually escalating into large-scale nationwide unrest, with casualties being the highest in past turmoil. Since November last year, protests have erupted in various parts of Iran due to rising prices and currency devaluation, subsequently spreading nationwide and resulting in violent riots and large-scale casualties, during which there was a complete internet shutdown for 8 days. By late January, the situation began to ease. On January 21, Iranian officials reported that recent unrest had resulted in 3,117 deaths.

Geopolitical conflict risks remain. On January 22, Trump stated that a "large fleet" from the United States is heading towards the vicinity of Iran.

From an economic geographical perspective, Iran has strong control over the Strait of Hormuz. The Strait of Hormuz is a vital artery for global energy trade, with the volume of oil and other liquid fuel trade passing through the strait accounting for about 20% of global consumption and about 27% of global maritime trade. The LNG trade volume through the strait accounts for about 20% of global LNG trade and about 9% of global natural gas trade.

1. Iran's main natural resources

2. Oil: Ranked third in proven crude oil reserves globally, with a current daily production of about 3.2 million barrels and an export volume of about 1.8 million barrels per day. Iran's proven crude oil reserves are approximately 200 billion barrels, second only to Venezuela and Saudi Arabia. By the second half of 2025, Iran's daily crude oil production is expected to account for about 3.2% of global production, with export volume accounting for about 4.1% of total global exports.

3. Natural gas: Ranked second in proven reserves globally, with production ranking third, but direct export proportion is small. Iran's proven natural gas reserves account for about 17.1% of the global total, second only to Russia. In 2024, natural gas production is expected to account for about 6.4% of global production, second only to the United States and Russia. Due to Iran's lack of LNG export facilities, it mainly relies on pipeline exports, with export volume in 2024 expected to be less than 5% of production, accounting for only about 0.7% of global exports.

4. Copper: Ranked among the top in reserves, but with a low production share. Global copper reserves are about 980 million tons, with Iran's copper reserves around 100 million tons, accounting for about 10%, ranking fourth globally, only behind Chile and Peru, and close to Australia. In the first ten months of 2025, Iran's copper production is expected to be about 320,000 tons, accounting for about 1.7% of global production.

5. Other mineral resources: In terms of production, Iran is the second-largest producer of direct reduced iron, and a major producer of gypsum and strontium, accounting for 25.8%, 10.6%, and 32.3% of global production, respectively; the fourth-largest producer of feldspar, accounting for 7.1% of global production; the sixth-largest producer of iron ore and kaolin, accounting for 3.0% and 3.9% of global production, respectively; and the seventh-largest producer of barite (excluding U.S. production), bentonite, and molybdenum, accounting for 2.8%, 3.7%, and 1.4% of global production, respectively. In terms of reserves, Iran has the largest reserves of barite and feldspar globally, the eighth-largest reserves of fluorite and iron ore globally, and zinc reserves account for about 4.4-6% of the global total, ranking 7th to 8th globally.

6. Iran's advantageous chemical industry Based on oil and gas resource endowments and policy support, Iran has a relatively strong chemical industry, with two products that have a significant import share in our country: 1) Methanol. Iran's methanol production capacity accounts for 9.2% of the global total, making it the second-largest producer. Iran's methanol exports account for about 55% of our total imports and 7.5% of our apparent consumption. 2) Polyethylene. Iran's polyethylene production capacity accounts for about 2.8% of the global total. Our country's dependence on imports of polyethylene and high-density polyethylene is 30% and 35%, respectively, with Iran accounting for 9% of our polyethylene imports and 14% of our high-density polyethylene imports.

IV. Iran's Export Structure

By country, China, Turkey, and India are the main export destinations for Iran. In 2023, the shares of exports to China, Turkey, and India were approximately 35%, 16%, and 8%, respectively. By product, polyethylene exports accounted for about 12.8%, iron ore exports for about 9.8%, methanol exports for about 4.2%, and exports of aluminum and copper each accounted for about 4%, while LNG exports accounted for about 3.4% and zinc exports for about 2.5%.

V. Which prices are most affected by geopolitical conflicts related to Iran?

The most obvious and direct short-term price shock is in crude oil, followed by methanol. A typical case is the Iran-Israel conflict in June 2025, during which oil prices surged by nearly 20% and methanol by over 10%.

Report Body

I. Overview of Recent Unrest in Iran

Economic difficulties have sparked protests across the country, escalating into large-scale nationwide unrest in Iran. Starting in November 2025, protests erupted in multiple locations in Iran due to rising prices and currency devaluation. By the end of December last year, protests rapidly spread from Tehran's Grand Bazaar to many parts of Iran, leading to violent riots. In early to mid-January this year, violence intensified, resulting in significant casualties, and Iran experienced an internet blackout for 8 days, with the Revolutionary Guard intervening to suppress the unrest. By late January, after Iranian authorities promised to address economic difficulties and increase law enforcement efforts, the situation began to ease.

This unrest is characterized by its large scale and wide reach, with casualties being the highest in past turmoil. On January 21, the Iranian National Security Council stated that the recent unrest had resulted in 3,117 deaths. The most severe social unrest in Iran over the past two decades includes: the 2009 Green Movement (controversy over presidential election fraud), the December 2017 protests (poor economic conditions and anti-government demonstrations), the November 2019 protests (soaring fuel prices and the cancellation of livelihood subsidies), and the 2022 "Women, Life, Freedom" protests (the death of Mahsa Amini due to the hijab law). The highest number of casualties occurred in 2022, with approximately 500 fatalities.

Geopolitical conflict risks remain. On January 22, Trump stated that a "large fleet" from the U.S. was heading towards the vicinity of Iran, "maintaining close surveillance on Iran." On January 25, Sani, a member of the Iranian Parliament's National Security and Foreign Policy Committee, stated in an interview that Iran would launch a fierce counterattack if it faced any form of aggression, with the scope of its strikes covering everything from the Strait of Hormuz to all U.S. interests in the region, and the means of retaliation would exceed the enemy's expectations

II. Basic National Conditions of Iran

(1) Population and Geographical Location

Iran is located in the southwestern part of Asia, with a land area of 1.645 million square kilometers. The capital is Tehran, with a population of approximately 88.5 million. Persians account for 66% of the national population, Azerbaijanis 25%, Kurds 5%, and the rest are Arabs, Turkmen, and other ethnic minorities. Islam is the state religion, with 98.8% of the residents practicing Islam, the majority being Shia.

As a regional power, Iran's geographical location is very important, and it also controls the Strait of Hormuz. Iran is bordered by the Persian Gulf and the Gulf of Oman to the south, and faces the Caspian Sea, Russia, and Kazakhstan to the north, known as the "Eurasian Land Bridge" and the "Aerial Corridor between East and West." At the same time, Iran has strong control over the Strait of Hormuz and has previously threatened to "blockade" the strait multiple times.

(2) Major Natural Resources

1. Rich in Oil Resources: Iran has the third-largest proven oil reserves in the world, with a current daily production of about 3.2 million barrels/day and an export volume of about 1.8 million barrels/day. According to OPEC and EIA estimates, Iran's proven oil reserves are about 200 billion barrels, second only to Venezuela and Saudi Arabia. In the second half of 2025, Iran's daily oil production is expected to be about 3.2 million barrels/day, accounting for approximately 3.2% of global supply; the oil export volume is about 1.8 million barrels/day, accounting for about 4.1% of global total exports.

Iran's oil exports mainly rely on Kharg Island, which handles over 90% of Iran's oil exports. The island is located in the northern part of the Persian Gulf, about 1,500 kilometers from the heart of Israel (Tel Aviv), and its oil exports also need to pass through the Strait of Hormuz.

2. Second in Proven Natural Gas Reserves, Third in Production Share, but Low Direct Export Share: Iran's proven natural gas reserves are about 1,183 trillion cubic feet, accounting for about 17.1% of the world's total, ranking second only to Russia. In 2024, Iran's natural gas production is expected to be 262.9 billion cubic meters, accounting for about 6.4% of global production, second only to the United States and Russia. Due to Iran's lack of LNG export facilities, it mainly relies on pipeline exports, with the export volume in 2024 being less than 5% of production, accounting for only about 0.7% of global exports.

3. Copper Reserves Rank High, but Production Share is Low: According to USGS data, global copper reserves are about 980 million tons, with Iran's copper reserves estimated at about 100 million tons, accounting for about 10%, ranking fourth in the world, only behind Chile and Peru, and close to Australia (USGS estimates Iran's copper ore reserves at about 1.92 billion tons, calculated at a grade of 0.5%). According to data from Iran's Mines and Mining Industries Development and Renovation Organization (IMIDRO), Iran's proven copper reserves account for about 5% of the world's known reserves, ranking seventh globally By October 2025, Iran's copper production is expected to be approximately 320,000 tons, accounting for about 1.7% of global production.

4. Other Mineral Resource Situations. According to USGS data from 2022, in terms of production, Iran is the second-largest producer of direct reduced iron, gypsum, and strontium globally, accounting for 25.8%, 10.6% (estimated), and 32.3% (estimated) of global production, respectively; the fourth-largest producer of feldspar, accounting for 7.1% (estimated) of global production; the sixth-largest producer of iron ore (by iron content) and kaolin, accounting for 3.0% and 3.9% of global production, respectively; and the seventh-largest producer of barite (excluding U.S. production), bentonite, and molybdenum, accounting for 2.8%, 3.7%, and 1.4% (estimated) of global production, respectively. In terms of reserves, Iran has the largest reserves of barite and feldspar globally, the eighth-largest reserves of fluorite and iron ore, with zinc reserves of approximately 11-15 million tons, accounting for about 4.4-6% of the global total, ranking 7th to 8th globally.

(3) Advantageous Chemical Industry

Based on its crude oil and natural gas resource endowment and policy support, Iran has a relatively strong chemical industry. According to data from the National Petrochemical Company (NPC) of Iran, by 2025, Iran's petrochemical production capacity will reach 100 million tons. Its core industrial cluster is mainly concentrated in the Assaluyeh Industrial Zone (along the Persian Gulf), where supply risks are significant if geopolitical conflicts escalate.

We mainly outline two products with a high import proportion in our country:

1) Methanol. By 2025, Iran's methanol production capacity is expected to rise to approximately 17.16 million tons, accounting for 9.2% of global total capacity, maintaining its position as the second-largest methanol producer in the world. In 2025, China's total methanol imports are expected to be about 14.41 million tons (with an apparent consumption of about 105 million tons in 2024), and methanol exported from Iran accounts for about 55% of China's total imports, representing 7.5% of apparent consumption.

2) Polyethylene. By 2025, Iran's polyethylene (PE) production capacity is expected to be about 4.5 million tons, accounting for approximately 2.8% of the global market. According to Bloomberg research, China's dependence on imports for polyethylene and low-density polyethylene (LDPE) is 30% and 35%, respectively, while Iran accounts for 9% of China's polyethylene imports and 14% of low-density polyethylene imports.

3. Main Export Situation

By country, China, Turkey, and India are the main export destinations for Iran. In 2023, the total export value is approximately $13.2 billion, with exports to China, Turkey, and India accounting for about 35%, 16%, and 8%, respectively.

By product, polyethylene, iron ore concentrate, methanol, and basic metals (aluminum, copper, zinc), LNG are the main export products of Iran. Polyethylene exports account for about 12.8%, iron ore concentrate exports account for about 9.8%, methanol exports account for about 4.2%, aluminum and copper exports each account for about 4%, LNG exports account for about 3.4%, and zinc exports account for about 2.5%

IV. The Impact of Geopolitical Conflicts in Iran on Related Commodity Prices

Focus on the short-term price feedback of crude oil and methanol. From the eve to the peak phase of the "Twelve Days" war in June 2025, over 7 trading days, crude oil prices rose by about 18%, and methanol prices increased by about 11.4%. Subsequently, as the conflict subsided, over three trading days, crude oil prices fell by about 15%, and methanol prices dropped by about 6%.

Since January of this year, internal unrest in Iran and Trump's threat of military intervention (on January 2) have led to an approximate 8.4% increase in crude oil prices and about a 1.7% rise in methanol prices.

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