Huachuang Securities Zhang Yu: Iran's Geopolitical "Gray Rhino" — Which Prices Are Affected?

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By : Zhang Yu, Chief Economist at Huachuang Securities

Report Summary

Although the turmoil in Iran seems to have eased, the geopolitical risk of “gray rhinos” is still present. This report mainly outlines Iran’s fundamental economic conditions, focusing on natural resources, advantaged industries, and export structure.

I. What happened in Iran recently?

Economic hardship sparked protests in various places, which gradually escalated into large-scale nationwide unrest in Iran. The number of casualties was the highest among past periods of turmoil. Starting in November last year, protests broke out in multiple regions of Iran due to issues such as rising prices and currency depreciation. They then spread across the country, accompanied by violent riots and large-scale casualties, during which the internet was completely shut down for 8 days. In late January, the situation began to stabilize. On January 21, the Iranian government officially stated that the recent unrest resulted in 3,117 deaths.

Geopolitical conflict risk remains. On January 22, Trump said that the U.S. “large carrier task force” is heading toward Iran’s surrounding region.

From an economic geography perspective, Iran has strong control over the Strait of Hormuz. The Strait of Hormuz is a key passageway for global energy trade. Approximately 20% of global consumption volume of oil and other liquid fuels flows through this strait; approximately 27% of global seaborne trade volume. The LNG trade volume flowing through the strait accounts for about 20% of global LNG trade volume, and about 9% of global natural gas trade volume.

II. Iran’s main natural resources

1. Oil: Iran ranks third globally in proven crude oil reserves. Its current daily production is about 3.2 million barrels/day, and its export volume is about 1.8 million barrels/day. Iran’s proven crude oil reserves are about 200 billion barrels, second only to Venezuela and Saudi Arabia. In the second half of 2025, Iran’s daily crude oil production is about 3.2% of the world, and its export volume is about 4.1% of global total exports.

2. Natural gas: Proven reserves rank second globally; the share of production ranks third, but the share of direct exports is small. Iran’s proven natural gas reserves are about 118.3 trillion cubic feet, accounting for about 17.1% globally, second only to Russia. In 2024, Iran’s natural gas production share of global production is about 6.4%, second only to the United States and Russia. Because Iran lacks LNG export facilities, it mainly relies on pipeline exports; in 2024, its export volume was less than 5% of its production, accounting for only about 0.7% of global export volume.

3. Copper: Reserves rank among the top tier, but the production share is low. Global copper reserves are about 980 million tons; Iran’s copper reserves are about 100 million tons, about 10%. Iran ranks fourth globally, behind Chile and Peru, and close to Australia. From the first 10 months of 2025, Iran’s copper production is about 320,000 tons, accounting for about 1.7% of global production.

4. Other mineral resources: In terms of production, the world’s second-largest producer of direct reduced iron and the producer of gypsum and strontium. They account for 25.8%, 10.6% and 32.3% of global production, respectively; the world’s fourth-largest feldspar producer accounts for 7.1% of global production; the world’s sixth-largest iron ore (including iron content) and kaolin producer accounts for 3.0% and 3.9% of global production, respectively; the world’s seventh-largest barite (excluding U.S. output), bentonite and molybdenum producer accounts for 2.8%, 3.7% and 1.4% of global production, respectively. In terms of reserves, Iran is the world’s largest reserves country for barite and feldspar, and the world’s eighth-largest reserves country for fluorite and iron ore. Its zinc reserves are about 11–15 million tons, accounting for about 4.4–6% globally, ranking 7th–8th worldwide.

III. Iran’s advantaged chemical industries

Based on its endowment of oil and gas resources and policy support, Iran has a number of advantaged chemical industries. There are two products that have a relatively large share imported into our country: 1) Methanol. Iran’s methanol production capacity accounts for 9.2% of the global total; it is the second-largest producer. Iran’s methanol exports to our country account for about 55% of our total imports and 7.5% of our apparent consumption. 2) Polyethylene. Iran’s polyethylene production capacity is about 2.8% of the global total. Our import dependency for polyethylene and high-pressure polyethylene is 30% and 35%, respectively; Iran accounts for 9% of our polyethylene imports and 14% of our high-pressure polyethylene imports.

IV. Iran’s export structure

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

V. Geopolitical conflicts related to Iran—which prices are affected the most?

The most obvious and direct short-term price shock is crude oil, followed by methanol. The most typical case is the “12-day” war scenario between Iran and Israel in June 2025. During the conflict, the maximum increase in oil prices was nearly 20%, while methanol rose by more than 10%.

Risk warning: Iran’s various statistical data may contain biases.

Main body of the report

I. Overview of Iran’s recent unrest

Economic hardship triggered protests in various places, gradually escalating into large-scale nationwide unrest in Iran. Starting in November 2025, protests took place in multiple regions of Iran due to issues such as rising prices and currency depreciation. By late December last year, the protests spread rapidly from Tehran’s Grand Bazaar to many places across Iran, accompanied by violent unrest. In early to mid-January this year, violence intensified and large-scale casualties occurred. Iran experienced an nationwide internet shutdown for 8 days, and the Islamic Revolutionary Guard Corps intervened to suppress it. In late January, after Iran’s authorities promised to address economic hardship and intensify law enforcement efforts, the unrest gradually eased.

This unrest had a large scale and wide coverage, with casualty figures being the highest among past periods of turmoil. On January 21, the Iranian National Security Council stated that the recent unrest resulted in a total of 3,117 deaths. Over the past 20-plus years, Iran’s most severe social unrest included: the 2009 Green Movement (controversy over presidential election fraud), the December 2017 protests (poor economic conditions and anti-government protest demonstrations), the November 2019 protests (a surge in fuel prices and the cancellation of subsidies for people’s livelihoods), the 2022 “Women, Life, Freedom” protests (Amini’s detention and death related to the hijab law). The deadliest was in 2022, with about 500-plus deaths.

Geopolitical conflict risk remains. On January 22, Trump said the U.S. “large carrier task force” is moving toward Iran’s surrounding region, “maintaining close and heightened monitoring of Iran.” On January 25, Sanie, a member of Iran’s parliament’s National Security and Foreign Policy Committee, said in an interview that if Iran is subjected to any form of infringement, it will launch a fierce counterattack. Its strike scope covers all interest networks in the region from the Strait of Hormuz to the United States, and its countermeasures will exceed the enemy’s expectations.

II. Iran’s basic national conditions

(1) Population and geographical location

Iran is located in the southwest of Asia. Its land area is 1,645,000 square kilometers, and its capital is Tehran. The population is about 88.5 million. Persians account for 66% of the national population, Azerbaijanis 25%, Kurds 5%, with the remainder comprising ethnic minorities such as Arabs and Turkmen. Islam is the state religion. 98.8% of residents follow Islam, and Shia Islam accounts for the overwhelming majority.

As a regional power, Iran’s geographical position is especially important, and it also controls the Strait of Hormuz. Iran is south-facing to the Persian Gulf and the Gulf of Oman. To the north, it is separated by the Caspian Sea from Russia and Kazakhstan. It is known as the “Eurasian Land Bridge” and the “air corridor between the East and the West.” At the same time, Iran has strong control over the Strait of Hormuz (a key passageway for global energy trade; see “How important is the Strait of Hormuz?”). In the past, it has repeatedly threatened to “block” the strait.

(2) Major natural resources

1. Rich oil resources: Iran ranks third globally in proven crude oil reserves. Its current daily production is about 3.2 million barrels/day and its export volume is about 1.8 million barrels/day. According to estimates by OPEC and EIA, Iran’s proven crude oil reserves are about 200 billion barrels, second only to Venezuela and Saudi Arabia. In the second half of 2025, Iran’s daily crude oil production is about 3.2 million barrels/day, accounting for about 3.2% of global supply; its crude oil export volume is about 1.8 million barrels/day, accounting for about 4.1% of global total exports.

Iran’s crude oil exports mainly rely on Kharg Island, a terminal that handles more than 90% of Iran’s petroleum exports. The island is located in the northern part of the Persian Gulf, about 1,500 kilometers from Israel’s core area (Tel Aviv). Its crude oil exports also need to pass through the Strait of Hormuz.

2. Natural gas: Proven reserves rank second globally; the production share ranks third, but the share of direct exports is small. Iran’s proven natural gas reserves are about 118.3 trillion cubic feet, representing about 17.1% of the global total, ranking second only to Russia. In 2024, Iran’s natural gas production was 262.9 billion cubic meters, accounting for about 6.4% of global production, second only to the United States and Russia. Because Iran lacks LNG export facilities, it mainly relies on pipeline exports. In 2024, its export volume was less than 5% of its production, accounting for only about 0.7% of global export volume.

3. Copper: Copper reserves rank among the top tier, while the production share is lower. According to USGS data, global copper reserves are about 980 million tons; Iran’s copper reserves are about 100 million tons, accounting for about 10%. Iran ranks fourth globally, second only to Chile and Peru, and close to Australia (USGS estimates Iran’s copper ore reserves at about 19.2 billion tons, translated to a 0.5% grade basis). If based on data from the Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO), Iran’s discovered copper reserves account for about 5% of the world’s known reserves, placing it seventh globally. In the first 10 months of 2025, Iran’s copper output is about 320,000 tons, accounting for about 1.7% of global output.

4. Other mineral resources. According to USGS 2022 data, in terms of production, Iran is the world’s second-largest producer of direct reduced iron, and a producer of gypsum and strontium, accounting for 25.8%, 10.6% (estimated) and 32.3% (estimated) of global production, respectively; the world’s fourth-largest feldspar producer accounts for 7.1% (estimated) of global production; the world’s sixth-largest iron ore (including iron content) and kaolin producer accounts for 3.0% and 3.9% of global production, respectively; the world’s seventh-largest barite (excluding U.S. output), bentonite and molybdenum producer accounts for 2.8%, 3.7% and 1.4% (estimated) of global production, respectively. In terms of reserves, Iran has the world’s largest reserves of barite and feldspar, the world’s eighth-largest reserves of fluorite and iron ore. Its zinc reserves are about 11–15 million tons, accounting for about 4.4–6% globally, ranking 7th–8th worldwide.

(3) Advantageous chemical industries

Based on its endowment of crude oil and natural gas resources and policy support, Iran has a number of advantaged chemical industries. According to 2025 data from Iran’s National Petrochemical Company (NPC), Iran’s petrochemical production capacity reaches 100 million tons. Its main industry clusters are mainly concentrated in the Assaluyeh Industrial Zone (along the Persian Gulf coast). If geopolitical conflicts escalate, supply risks could be significant.

We mainly summarize two products with a relatively large import share into our country:

1) Methanol. In 2025, Iran’s methanol production capacity is projected to rise to about 17.16 million tons, representing 9.2% of global total capacity, firmly maintaining its position as the world’s second-largest methanol producer. In 2025, China’s total methanol imports are about 14.41 million tons (with 2024 apparent consumption of about 105 million tons). The methanol Iran exports to China accounts for about 55% of China’s total imports and 7.5% of apparent consumption.

2) Polyethylene. In 2025, Iran’s polyethylene (PE) production capacity is about 4.5 million tons, representing about 2.8% of the global total. According to a study by Bloomberg, China’s import dependency for polyethylene and high-pressure polyethylene (LDPE) is 30% and 35%, respectively, while Iran accounts for 9% of China’s polyethylene imports and 14% of China’s LDPE imports.

III. Major export situation

By destination country, China, Turkey, and India are Iran’s main export destinations. In 2023, total export value was about $13.2 billion. The shares of exports to China, Turkey, and India were approximately 35%, 16%, and 8%, respectively.

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

IV. Impact of Iran’s geopolitical conflicts on the prices of related commodities

Focus on the short-term price feedback of crude oil and methanol. From the eve of the “12-day” war in June 2025 through the peak period, over seven trading days, the crude oil price rose by about 18% and methanol by about 11.4%. After the conflict subsided, over three trading days, crude oil fell by about 15% and methanol fell by about 6%.

Since this January, Iran’s internal unrest and Trump’s threats of military intervention (on January 2), so far crude oil prices have risen by about 8.4%, while methanol prices have risen by about 1.7%.

For details, please refer to the report published by Huachuang Securities Research Institute on January 27, titled “【Huachuang Macro】Iran’s ‘Gray Rhino’ geopolitics: Which prices are affected?”.

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