Across Iran, a government-mandated shutdown has been implemented affecting multiple sectors including businesses, educational institutions, and government offices. This action spans 21 provinces, reflecting the scale of disruption caused by mounting public protests and a deepening crisis both politically and economically.
The protests have intensified to the point of violent confrontations, resulting in the death of a member of Iran's paramilitary Revolutionary Guard. This marks the first fatality among security personnel during the current wave of protests, specifically occurring in Kouhdasht, a city located in Lorestan province. Video evidence disseminated by the People's Mojahedin Organization of Iran (MEK) has revealed intense clashes between protesters and security forces in several cities. Protesters have been observed chanting slogans opposing the regime while engaging with security operatives amid crowded urban streets.
This shutdown, impacting approximately two-thirds of Iran's provinces, arrives at a critical juncture for President Masoud Pezeshkian, who is confronting growing public dissatisfaction. The unrest has been driven primarily by economic pressures including high inflation rates, currency instability, and declining living standards. Compounding this volatile environment are a series of notable changes in the country's leadership structure, further contributing to the uncertainty prevailing within the nation.
On the international front, 2025 has witnessed a sharp downturn in crude oil prices, with a decline nearing 20% - one of the steepest annual reductions since 2020. This decline has been predominantly influenced by fears of oversupply, fueled by increased production from OPEC+ member countries alongside stagnant demand growth. Additionally, persistent sanctions on major oil-producing nations such as Iran, Russia, and Venezuela continue to weigh on market dynamics.
Brent crude closed the year around $60.85 per barrel, and the U.S. West Texas Intermediate (WTI) settled near $57.42. Market sentiment during this period has largely centered on fundamental supply-demand considerations, with limited immediate reflection of geopolitical disturbances within pricing structures.
Nonetheless, the ongoing unrest inside Iran injects a significant layer of unpredictability into the global energy landscape. As a pivotal oil producer subject to international sanctions, any escalation in civil unrest has the potential to disrupt oil production facilities, impede export logistics, or destabilize the strategically critical Strait of Hormuz region through which a sizeable proportion of global oil shipments pass. Such disruptions—ranging from supply interruptions to increased risks to shipping routes—could trigger a recalibration of geopolitical risk premiums embedded in oil market pricing.
Analysts, including those at BNP Paribas, project Brent crude prices may decline towards $55 per barrel in early 2026 before stabilizing near the $60 mark as supply growth normalizes. However, the extent of domestic instability in Iran may serve as a limiting force against sharper price declines. Should the unrest escalate or propagate broader regional tensions, oil markets could experience volatility beyond that accounted for by market fundamentals alone.
While the predominant market narrative in 2025 has been characterized by surplus supply and lackluster demand, Iran’s internal turmoil remains a latent factor capable of reshaping price trajectories amid the conventional baseline assumptions. This potential influence is especially noteworthy in an environment where market participants have largely downplayed geopolitical risk in relation to oil supply.