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On December 28th, traders in Tehran went on a strike following the Iranian rial crash, leading to sudden inflation and high commodity prices. In the two weeks since, the protests have spiralled into nationwide unrest–the largest demonstration Iran has seen since 2022–claiming more than 2,000 lives.
While Iran has intensified its crackdown in its attempt to arrest the domestic unrest, it is also reeling under international pressure with U.S. President Donald Trump’s threat to intervene and the European Parliament’s move to ban Iranian diplomats and other representatives.
Data shows international pressure could only deepen the crisis, as it did with years of sanctions on Iran’s economy, by contributing to and exacerbating the country’s economic woes.
These demonstrations in Iran are not out of the blue; ACLED data show that the country has witnessed at least 30,000 demonstrations in the last decade.
The latest one is fuelled by years of economic crisis and soaring prices.
One of the primary causes for the strike that triggered the unrest was the sliding value of the Iranian rial, which made it impossible for traders in Iran to import essential commodities or even sell them at unprofitable rates. The market value of the Iranian rial has devalued by more than 2,000 times in January compared to last year. The value of one Iranian rial to a dollar stood at more than a million rial in recent days.
Inflation has climbed to 42.5% at the end of 2025, with no relief despite prolonged highs in the previous years. In Tehran’s market, food prices surged. A comparison of food prices between November 2024 and 2025 (latest data available) shows that the price of cereals and tubers increased by more than 200%, meats, fish and eggs by 47%, and pulses by 85%.
The plunging value of the rial has only worsened things for the theocratic regime that was wearing down economically due to sanctions. While corruption and mismanagement could also be factors leading to the crisis, the impact of reimposed economic sanctions (or what is being termed “snapback” sanctions) by the UN in September has aggravated the crisis.
These sanctions froze Iranian assets abroad, penalised any development of Iran’s ballistic missile programme and also halted arms deals with Tehran.
The reimposition of sanctions came into effect after the UK, France and Germany accused Iran of “continued nuclear escalation”. The sanctions were initially lifted in the landmark Joint Comprehensive Plan of Action deal over its nuclear programme in 2015. It was signed by Iran with the U.S., European Union, China, France, Germany, Russia and the UK. The deal capped Iran’s uranium enrichment at 3.67%. As a result of this deal, Iran was relieved from sanctions in exchange for strict supervision of its nuclear activities by the International Atomic Energy Agency (IAEA).
However, the U.S.’s withdrawal from the JCPOA during the first Trump administration in 2018 led to the reimposition of sanctions. Last year, towards the expiration of the deal, Iran had suspended inspections of its nuclear facilities after the 12-day-war in June, in which the U.S. and Israel attacked several of its nuclear bases. Tehran suspended cooperation with the IAEA, citing its failure to condemn Israeli and U.S. strikes on its nuclear facilities.
The reimposition of sanctions, however, came at a time when economic pressure was already building up in Tehran. The country’s GDP grew at merely 0.6%, much less than the region’s average of 2.7% and a 84% deceleration compared to last year’s growth rate. Foreign direct investment in the country, as a share of GDP, hit its lowest mark since 2001 at 0.3%.
Trade has consistently formed more 40% of the country’s GDP since the 2000s. When the currency took a hit, trade tumbled consequently. Despite being a petrostate, Iran’s global share in fuels declined since 2012. Though its crude oil and condensate exports slowly recovered in 2024, China accounted for 97% of its exports. Revenue from oil exports also stagnated at 40-43 billion dollars, much less than pre-Covid period.
China is not only Iran’s major oil export destination but also accounts for more than 30% of Iran’s imports in 2023, almost six times its share in 2001.
Iran’s dependence on China could also be explained by the widespread sanctions on Iran from various countries. The United States has, over the years, imposed close to eighty sanctions on Iran and related entities.
According to OpenSanctions.org, an international database of persons and companies of political, criminal, or economic interest, Iran is collectively subject to more than a thousand export-related sanctions. Several entities/persons also fall under these sanctions.
While Iran’s unrest, though triggered by economic woes and anger among many due to the continued curtailment of civil liberties under the theocratic regime, is also mainly the result of decades-long sanctions, regional instability, exacerbated by the mismanagement of vast economic resources.
Data for the charts were sourced from Harvard Global Atlas, OpenSanctions.org, World Bank, IMF and ACLED
Published – January 15, 2026 07:00 am IST
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The economic triggers for the protests in Iran
