Iran at the Crossroads of Global Trade: Transitioning from an Oil-Based Economy

Transitioning from an Oil-Based Economy
By Seyed Abbas Hosseini, Member of the Executive Board of IMIDRO (Iranian Mines and Mining Industries Development and Renovation Organization)

According to the Public Relations Office of the Trade Promotion Organization of Iran, quoting the Ministry of Industry, Mine, and Trade, Seyed Abbas Hosseini, a member of the executive board of IMIDRO, wrote in a note titled "Transitioning from an Oil-Based Economy":

In the first half of this year, Iran's non-oil exports—despite the circumstances resulting from the Zionist regime's war against the Iranian people—stood at approximately $26 billion, nearly equal to the same period last year. However, the weight of exported goods increased by 6%, indicating a rise in export volume. Yet, due to falling global prices for some goods and stagnant dollar values for others, this volume growth has not translated into greater foreign exchange earnings. In line with the national policy of avoiding raw material exports, we must shift focus from merely increasing volume to enhancing the value of exports.

Iran has reached a critical point where increasing export volume alone is no longer sufficient. The future of the country’s exports depends on structural transformation, enhanced transparency, improved logistics infrastructure, development of high value-added industries, and the strategic use of economic diplomacy.

A diagnostic analysis of Iran’s export basket reveals several key issues that require urgent reform:

1. Over half of Iran’s exports consist of basic and semi-processed goods, such as natural gas, propane, methanol, and petrochemicals. This indicates a need to redirect support policies toward developing value chains and increasing the share of high value-added products.
2. Iran’s exports are overly dependent on a limited number of destinations. Any slight change in the import policies or exchange rates of these countries directly impacts Iran’s export revenues.
3. The multiple exchange rate system has resulted in part of the foreign currency earnings from exports not returning through the official system. The gap between customs export data and the repatriated currency recorded in the NIMA system is evidence of this issue.
4. Inadequate transportation infrastructure, high port and customs costs, and delays at borders significantly erode the profitability of exports.
5. The lack of traceability systems for value chains leads to unregistered exports and unreturned export earnings.
6. In many industries, Iranian goods are exported in bulk or through intermediary brands, with the final value-added captured by destination countries.

The Seventh Development Plan identifies non-oil exports as a key driver of economic growth, with goals to increase export value, diversify markets, and promote technology-based exports. However, despite improved performance in 2024 (1403), there remains a significant gap with the plan's targets in the first half of 2025 (1404).

The mining and mineral industries have the potential to become a central pillar of Iran’s non-oil economic growth. This sector, despite various constraints, remains highly dynamic and generated about $14 billion in foreign exchange in 2024. With appropriate currency and trade policy reforms, this figure could easily double.

Moreover, Iran’s steel value chain exports have experienced significant growth in the first half of this year, highlighting Iran’s capacity to become a major player in the global mineral and metal markets. However, discrepancies in statistics among government bodies have complicated policymaking, an issue that needs urgent resolution.

Iran has long been a major hub of global trade. Historically situated along the Silk Road, with active ports in the Persian Gulf and the Sea of Oman, and vast networks of caravanserais connecting East and West, Iran has played a vital role as both a goods exporter and a cultural and economic bridge between civilizations. Reviving this historical role through modern export strategies can serve as a strong foundation for restoring the country’s economic influence in the evolving global order.

Iran must shift from raw material exports toward value-added products such as agro-processed goods, industrial components, and knowledge-based products. To achieve this, precise indicators and strategic guidance must be established to raise the share of high value-added goods to 30% of total exports in the short term. Facilitating the return of export earnings would also have an immediate and significant effect on boosting exports, and requires urgent action. Bilateral currency agreements with regional countries could help mitigate the risks associated with repatriating export revenues.

To support these goals, three key national programs have been formulated and implemented to expand exports and enhance foreign exchange earnings:

1. The "National Strategy for Industrial Advancement and Value Chain Development", developed in line with Article 48, Clause T of the Seventh Development Plan and recently approved by the Cabinet, aims to position Iran as a key player in regional value chains and to boost export-oriented, high value-added production.
2. The "Export and Foreign Exchange Support Package", part of the national program for "Growth, Stability, Progress, and Justice", provides financial incentives, trade facilitation measures, and the removal of production and export obstacles to strengthen the national economy.
3. The "National Industrial Cluster Development Program" offers an opportunity to design export stimulus packages for industrial clusters. Launching cluster-based export projects at the provincial level—in areas such as carpets, dried fruits, and food industries—with credit and export insurance support, can rapidly and tangibly boost non-oil exports.

As recent data and experiences suggest, Iran’s non-oil exports have reached a stage where volume growth alone is no longer adequate. The country faces a pivotal decision: to continue on the current path of limited, unstable growth, or to pursue institutional reform, data transparency, and targeted support for high value-added industries to achieve sustainable progress. In many product categories, poor packaging, non-compliance with international standards, and weak marketing and branding have led to lower export prices. Furthermore, domestic logistics infrastructure—including warehouses, regional transport networks, and transit corridors—requires substantial improvement.

Fortunately, Iran’s accession to three major economic cooperation frameworks—Shanghai Cooperation Organization (SCO), BRICS, and the Eurasian Economic Union (EAEU)—has laid the groundwork for a new structure of multilateral economic diplomacy. These alliances provide valuable opportunities to align Iran’s export strategies with emerging geo-economic trends.

Additionally, Iran’s Free Trade Agreement with the Eurasian Economic Union, which came into effect at the beginning of this year, enables tariff-free trade with five member states. This agreement could ease the export of Iranian mineral, steel, and metal products to regional markets and improve Iran’s competitiveness against countries like Russia and Turkey.

However, alongside these regional opportunities, new EU sanctions imposed in September 2025 have introduced significant restrictions on the export of Iranian metals and mineral products. Nevertheless, focusing on alternative markets such as Central Asia, East Asia, and East Africa can help offset the pressure of Western sanctions. Regional cooperation must be leveraged to achieve a genuine leap in Iran’s export performance.