Iran’s Oil Minister Mohsen Paknejad recently resigned amid controversies and allegations surrounding irregularities in Iran’s oil sales. Iran’s oil exports were recorded to have collapsed amid the US blockade and sanctions. The resignation also coincides with increasing pressure on the Iranian government amid its failure to manage the economic situation of the country. With year-on-year inflation around 90%, the rial falling to successive record lows and questions emerging over billions of dollars in oil revenues, the government faces mounting pressure. The resignation of the oil minister and subsequent responses from the Iranian government in recent weeks indicate the attempts by the Iranian government to manage public tensions and maintain confidence at a time when public pressure continues to challenge the official narratives.
The resignation of the oil minister comes amid worsening economic conditions in Iran. Annual food inflation reached approximately 130%, disproportionately affecting lower-income households. By early October, the dollar was trading at approximately 269,000 tomans (2.69 million rials). At this exchange rate, the reported minimum monthly wage of 166 million rials was worth approximately $62. Currency depreciation has increased import costs, weakened purchasing power and reinforced inflationary expectations, creating additional pressure on businesses and households. Recently, Iran’s Central Bank announced plans to inject up to $2 billion into the foreign exchange market to support the rial. However, the currency continued to depreciate despite the intervention. Iranian officials have publicly disagreed over responsibility for the economic crisis. Economy Minister Ali Madanizadeh rejected US claims of an impending economic collapse, arguing that external pressure and attempts to generate market panic were contributing to the rial’s depreciation. The Central Bank similarly attributed exchange rate instability partly to uncertainty and market expectations. However, parliamentarians like Nadergholi Ebrahimi claimed that the war accounted for no more than 25% of recent price increases and accused economic officials of worsening inflation. These accusations are politically significant because they reveal serious disagreements over government policy. Moreover, when considered alongside the oil minister’s resignation and mounting scrutiny of oil revenues, they also point to broader tensions over economic management and institutional accountability.
The controversy surrounding Paknejad’s resignation has drawn attention to a longstanding problem in Iran of the reliance on intermediaries to sell oil and recover payments outside conventional financial channels. Some reports show that during the time of Ebrahim Raisi, this scheme expanded, reportedly reducing the Ministry of Petroleum’s direct control over oil revenues. As per some reports, in one of the board meetings in which President Masoud Pezeshkian was also present, Paknejad complained about the interference of the president’s office in the Oil Ministry’s operations. The transparency related to such dealings and the lack of avenues for public scrutiny have further fueled skepticism. The intermediaries, commonly referred to as trustees, are individuals or commercial entities authorized to facilitate oil sales, arrange payments and return export earnings to Iran. Their role has expanded as US sanctions restricted Iranian access to international banks, shipping services and established oil markets. This arrangement has enabled Tehran to continue exports despite restrictions, but it has also complicated financial oversight. An intermediary can control the relationship with the foreign buyer, the payment account and the channels through which proceeds are returned. This makes it difficult to distinguish legitimate payment delays from contractual non-compliance or deliberate diversion of funds.
After Paknejad’s resignation, Hamid Bovard was named as the acting minister. Bovard previously headed the National Iranian Oil Company (NIOC) and was sanctioned by the US Treasury in 2025 over his role in Iran’s petroleum sector and oil exports. His appointment comes amid scrutiny of Iran’s oil sale intermediaries and concerns over the recovery of oil revenues. Iranian parliamentarians have raised questions about the allocation of approximately 80 million barrels of crude oil to four intermediaries. Lawmaker Valiollah Bayati identified Hossein Shamkhani, the son of former Supreme National Security Council Secretary Ali Shamkhani, as one of the individuals involved. Another parliamentarian, Hossein Samsami, alleged that more than 86 million barrels had been allocated to trustees without adequate guarantees or procedures. On September 13, the Iranian Labour News Agency (ILNA) reported that a letter attributed to then NIOC CEO Hamid Bovard identified several billion dollars in outstanding obligations associated with another intermediary named Hossein Aghayari. The report also alleged that a contract had been authorized without approval from the relevant sanctions-countering task force. Iranian newspaper Farhikhtegan also reported that an intermediary arrangement owed NIOC nearly $2 billion. As per some reports, senior Islamic Revolutionary Guard Corps (IRGC) Commander Hossein-Reza Sadeghi and his son Saeed had been involved in restructuring an oil sales network and shifting financial operations from the UAE to Russia. The report also linked these kinds of arrangements to networks associated with IRGC intelligence. Oil trade with China has also now come under scrutiny. Abdolhossein Hemmati Saraparde, deputy head of Parliament’s Energy Commission, acknowledged that details of some contracts regarding oil trade with China may have been unclear even to the oil minister. These developments have revealed serious gaps in reported oversights and raised questions about outstanding revenues.
The recent controversy has escalated internal tensions and has prompted parliamentary scrutiny. Some parliamentarians have also questioned the appointment of Ali Akbar Pourabrahim to lead the Naftiran Intertrade Company (NICO). Lawmaker Ali Khazrian had raised concerns about the legal and regulatory checks preceding the appointment. In September, lawmaker Ahmad Bigdeli announced an investigation proposal examining oil sales and the collection of outstanding revenues by NIOC and its international trading subsidiary, NICO. The proposed review extends to issues like contracts, the selection of intermediaries, pricing discounts, repayment schedules, financial guarantees and the qualifications of officials involved in approving transactions.
In the current context, the role of the IRGC becomes significant and sensitive as it gives credibility to longstanding allegations of mismanagement of oil revenues beyond the formal authority of the Oil Ministry, paving the way for opaque practices. The nature of corruption in Iran remains an important context here. As per Transparency International’s 2025 Corruption Perceptions Index, Iran ranked 153rd among 182 countries. Corruption risks are particularly apparent where politically connected appointments, preferential contract allocations and limited financial transparency weaken institutional oversight and accountability. Under sanctions, intermediaries perform functions that the state cannot easily replace. This gives them commercial leverage and potentially political protection. The more Iran has depended on these networks, the harder it has become to impose strict accountability without disrupting the revenue flows on which the government depends, especially as the IRGC remains immune to any scrutiny.
The resignation Paknejad has exposed internal disagreements over economic management and the divergences between the political and security establishments in Iran. Although the president’s office attributed his departure to personal reasons, Iranian media linked it to disputes over oil revenues. Major decisions related to the Iranian economy, which is highly dependent on energy exports, are fragmented across institutions with different political and commercial interests. This limits the government’s capacity to improve transparency and accountability. Furthermore, external sanctions and domestic governance weaknesses increasingly reinforce one another. Restrictions on formal trade and banking have encouraged less transparent financial arrangements, while limited oversight has made it harder to establish responsibility for delayed revenues and questionable transactions. This results in a system in which the government faces mounting economic pressure but lacks sufficient control over the institutions needed to address it.
Worsening economic conditions and inconsistent government responses have further weakened public confidence in the government’s ability to address the crisis. Government officials have emphasized sanctions, war and external economic pressure, all of which are substantial contributors to the current deterioration. However, the limited disclosure of information concerning state finances, internal disagreements and economic decision-making makes it difficult for citizens to assess and question policy failures. The accumulation of public grievances, divisions within the political establishment and allegations of institutional corruption have intensified underlying societal tensions. Restrictions on dissent and the absence of any effective mechanism for public accountability further limit the institutional channels through which these grievances can be addressed. This dissatisfaction adds to broader political frustrations and longstanding grievances over the lack of transparency in the management of national resources, particularly allegations of opaque oil dealings involving IRGC-linked networks.
