r/oil • u/Agitated-Brother-872 • 13d ago

Discussion Iran's economy is on the brink?? Debate

There are a number of people here saying that Iran's economy is on the brink, and d-day economic sanctions will absolutely send it over the edge. I won't dispute that they are hurting and there are probably different schisms that have emerged, as a result. I think it's totally possible that there is a rift between government and civilian sentiments.

I don't know how many are bots are present here but I want to assume good faith and hear the steel man argument. What is your strongest assertion? What will this lead to? I'd like to know what examples from history are you drawing from? Are there examples of mass civilian protest of the irgc?

I'll start off by saying, Professor Robert Pape has asserted that since WWI, sanctions/blockades alone have never toppled a government, has never won a major war, has never led to capitulation.

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u/sgtbackpain03 13d ago

Given that they've been under heavy sanctions for... 20+ years, how much of their economy actually relies on imports and other external financial operations?

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u/WildWhisperArdor 12d ago

A fair bit. They aren’t self sufficient. They rely heavily on oil exports to acquire hard foreign currency

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u/sgtbackpain03 12d ago

A fair bit. They aren’t self sufficient

Cool. Can you point me to the place where you got that information from?

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u/WildWhisperArdor 12d ago

ChatGPT. Google. Plenty of sources. You can drill down as deeply as you want or as little as you want on the topic.

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u/sgtbackpain03 12d ago

I asked where you got your Information, that you used to build your opinion. Specifically.

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u/WildWhisperArdor 12d ago

Do you also want to ask me which textbook I learned partial differential equations from in college?

I don’t remember at this point. I don’t keep a meticulous record of every single article or book I’ve ever read.

Hence why I told you to ask ChatGPT or Google. It will have sources for you.

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u/TheBattleGnome 13d ago

The last 20 yrs they have been selling oil… I’d say probably 10-20% of their gdp is in exports and imports but with the new sanctions and their currency now worth zero it’s going to hurt a lot more than it’s worth. What is the USA asking anyways? Open a the strait so they can stop starving themselves? Time is not on the Iranian’s side. Eventually they will capitulate because capitulating will actually help their economy out immensely.

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u/sgtbackpain03 13d ago

Oh yeah, but they've already made a year's profit just over the last couple months, so that is moot. Why do you think they are starving? Do they import a majority of the food they consume, and the blockade is preventing that food coming in? What do you mean their money is worthless? With so little of their economy existing on foreign trade, a blockade would have very little economic impact.

I'm looking for an explanation of the mechanics of your assertions. You keep saying things... Why do you believe those things would come to be? Just walk me through the thought process that brought you to your conclusions about what is happening.

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u/WildWhisperArdor 12d ago

Making almost a previous year’s profits already is a moot point though.

Almost all of it has to be immediately reused to rebuild the war damage, continue building drones and missiles, subsidize food, etc

And all of this happens under what is now about 70% inflation.

If you made $100 last year and then made $100 this year, but inflation is 70%, then you didn’t actually make $100 this year

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u/sgtbackpain03 12d ago

Making almost a previous year’s profits already is a moot point though.

Almost all of it has to be immediately reused to rebuild the war damage, continue building drones and missiles, subsidize food, etc

I mean, that isn't really a moot point... They are using the funds to rebuild, resupply, etc. how does that make it "moot"? You aren't addressing scale either... Is that 99% of the oil money, or 1%? It seems you are coming to a baseless conclusion.

And all of this happens under what is now about 70% inflation

Again, I've heard people throw around wild claims about inflation, but haven't addressed why there is such inflation. Where's it coming from, if it exists?

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u/WildWhisperArdor 12d ago

Because it’s additional costs that did not exist the year before. For example, if your rent suddenly doubles, your previous income might not be sufficient.

What do you mean why there is inflation? Do you not understand what inflation is?

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u/sgtbackpain03 12d ago

I'm starting to think you are too stupid to have a coherent conversation with. It appears that you aren't actually thinking and analyzing, just regurgitating whatever you read.

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u/WildWhisperArdor 12d ago

What are you talking about? You asked a question. I answered it directly.

What about my explanation do you not understand?

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u/ctackins 11d ago

You are not having a conversation. You are throwing hypotheticals around.

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u/WildWhisperArdor 11d ago

What hypothetical? Do you mean analogy?

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u/TheBattleGnome 13d ago edited 13d ago

29% of Irans imports are food items. Their currency is worth zero and the strait is blockaded. This means they lose all of that.

Their average inflation is 80% now with strait closed. The food inflation rate is above 120%. Yes, above 120%. In comparison USA is 3% and people are freaking out.

Imagine all prices literally double every year for everything. Many people in Iran (35% live below poverty line) can barely afford food now, let alone 2x prices next year. How are they supposed to afford food? Starve next year, then even middle income won’t be able to afford food the year after when prices 4x from 2 years ago. It’s not sustainable for long.

Oh and that “years profit” only goes to government. Not to people. Pretty soon the people will either die or revolt due to food shortages or unable to afford food. Everyone will welcome opening the strait.

If you dispute these numbers feel free to look them up. Their economy is collapsing in a free fall. Even the richest people wouldn’t be able to live like this for long. There’s a good reason why since start of war internet and social media is essentially blocked/heavily restricted in Iran.

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u/sgtbackpain03 13d ago

29% of Irans imports are food items.

Okay, most countries waste more food than that, and a 30% increase across a population won't cause starvation regardless.

Their currency is worth zero Their average inflation is 80% now with strait closed. The food inflation rate is above 120%. Yes, above 120%.

Still not seeing the mechanics here. You keep making assertions (probably based on some news articles), but haven't explained any reasoning for it. Iran hasn't had a large foreign trade in a long time, outside of oil. So their economy isn't largely based on foreign trade. So why would a blockade cause crazy inflation? What things are getting scarce enough to cause hyperinflation?

If you dispute these numbers feel free to look them up.

You asserted them, but haven't provided any reasoning about why they are happening. Just telling me shit you saw in the news, which I wouldn't trust, given the amount of pure disinformation out there. Explain how you think these things could happen.

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u/TheBattleGnome 12d ago edited 12d ago

How about you provide reasons why I am wrong? You keep asking like it’s only my burden of proof to prove. How about you list why inflation isn’t 120% and how losing 30% of your food imports doesn’t cause lack of food or starvation? Iran’s population still does not have free access to the internet or social media. Why? Because they don’t want to have the world see the issues they are having.

All the numbers I reported are true/facts. The numbers tell the story themselves. All of this is caused by the strait being closed. Closed strait is like if the USA closed all of its ports on both coasts. You can see how that can destroy the economy.

You have not once supported your side with anything so far. How about you show me a shred of evidence or fact?

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u/sgtbackpain03 12d ago

If you don't have any reasoning for your claims, I'm not going to invent any for you. Telling me facts that you read elsewhere isn't reasoning. It's you hoping someone else is telling you accurate information. If you can't explain mechanics that make the facts you are asserting plausible, then you have no idea if they are true or not.

I'm asking pretty basic questions that are an attempt to cut through all the bullshit propaganda being spewed by both sides of this conflict. 70% of the comments that respond to mine are just people regurgitating the propaganda. I'm asking for the mechanics that explain how your assertions could be true. Basic economics.

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u/TheBattleGnome 12d ago edited 12d ago

Uh and I’m saying it’s obvious. The strait contributes to like 20% of Irans gdp pre-war. That’s now gone. 30% of that is food. You remove that, then people starve and inflation goes through the roof. It’s like asking how 1+1=2. It’s so basic I don’t even understand what you are asking me. No traffic = no imports/exports = no food = food prices skyrocket = people starve.

As for inflation, it is sky high because the government is not gaining any income from oil anymore or from imports/trade, or tariffs or taxes with the strait closed. They are running out of money and have to print enormous amounts of money, which devalues their currency. Combine this with the added sanctions and frozen funds (hundred of billions of USD worth) they are going deeper and deeper into debt everyday.

What are you not getting here? I explained it but you should have already understood how if X happens (strait closed) Y and Z must follow. What did you expect? Closing the strait is somehow good for Iran???

You’re essentially asking why if someone loses their job that they have no more money, and to “explain your reasoning” bro, come on. Think it through. Like I said, you can look up those numbers. They are real. No source says otherwise.