In the volatile landscape of global energy, few scenarios carry as much potential for disruption as political upheaval in a major oil-producing nation. As of January 2026, Iran remains a key player in the oil market despite ongoing U.S. sanctions, exporting around 1.5 to 1.8 million barrels per day (mbpd) of crude oil.
This represents a significant portion of the world’s sanctioned oil supply, often sold at discounts to evade restrictions. A hypothetical revolution in Iran—echoing the 1979 Islamic Revolution that halved the country’s output and doubled global oil prices—could send shockwaves through energy markets, exacerbating supply shortages and driving up prices amid already tight conditions. Compounding this, neighboring Iraq’s ongoing political and economic instability adds another layer of risk, as both nations’ energy sectors are intertwined through trade and regional dynamics.
Iran’s Oil and Gas Exports: A SnapshotIran’s energy exports are a lifeline for its economy, generating billions despite international pressures. In December 2025, physical oil exports averaged 1.56 mbpd, totaling 48.3 million barrels for the month.
Production stood at approximately 3.22 mbpd in November 2025, with exports holding steady at elevated levels throughout the year.
These figures mark a recovery from lower volumes in prior years, facilitated by a “dark fleet” of tankers that obscure shipments to bypass sanctions.
On the natural gas front, Iran’s exports have faced headwinds. Volumes declined by 25% in weight and 32% in value during the first seven months of 2025 compared to the previous year.
Key pipeline exports include up to 50 million cubic meters per day to Iraq under a 2024 agreement, and up to 9.6 billion cubic meters annually to Turkey, though that contract expires in July 2026.
Recent interruptions, such as a halt in gas supplies to Iraq in December 2025 due to an emergency, highlight the fragility of these flows. Overall, gas exports were around 8.97 billion cubic meters in December 2024, with deliveries rebounding in some quarters but remaining inconsistent.
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Export Type
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Approximate Volume (2025 Average)
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Key Notes
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|---|---|---|
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Crude Oil
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1.5-1.8 mbpd
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Mostly via dark fleet; November 2025 exports generated $3.2-3.4 billion at discounted prices.
eia.gov
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Natural Gas
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9-13 billion cubic meters annually (pipeline-focused)
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Declines noted; includes LPG and other products at record highs in some months.
fred.stlouisfed.org
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Iran’s Customers: Reliance on Asia and Regional Ties
China dominates as the primary buyer of Iranian oil, absorbing the bulk of exports through independent refiners with granted import quotas. In 2025, China imported Venezuelan crude at around 389,000 bpd, but traders expect Iranian oil to fill gaps as Venezuelan supplies wane. The United Arab Emirates follows as the second-largest destination, taking about 120,500 bpd in November 2025. Other notable importers include Syria, which has shifted sources amid disruptions in Iranian supplies, and historically India and South Korea, though volumes have fluctuated due to sanctions.
For gas, Iraq and Turkey are the main recipients, with Iran also exporting electricity to Iraq—flows that have been halted intermittently due to domestic demands and U.S. sanctions. These dependencies underscore the regional energy web, where Iran’s role as a supplier could unravel amid internal chaos.
The Hypothetical Revolution: Disruption and Price Volatility
A revolution in Iran would likely mirror historical precedents, such as the 1979 upheaval that disrupted 4-5 mbpd of global supply and triggered price spikes. Today, with exports at 1.5-1.8 mbpd, a sudden halt could remove a meaningful slice from the market, especially if protests escalate into regime change or prolonged instability. Oil prices have already shown sensitivity to Iranian unrest, rising on concerns over potential output interruptions.
Key impacts could include:
Supply Shortfalls: Immediate export disruptions, leading to higher floating storage and delayed deliveries. China’s refiners might pivot to Russian or other sanctioned oils, but global benchmarks like Brent could surge 10-20% short-term.
Geopolitical Ripples: Strained relations with allies like Venezuela (already in flux post-Maduro) could amplify effects, as Iran loses barter partners for heavy crude.
Market Swing Factor: Iran’s output acts as a buffer in tight markets; its loss could exacerbate volatility, particularly if OPEC+ fails to compensate.
Longer-term, a post-revolution Iran might seek sanction relief, potentially flooding the market with additional supply—but only after years of recovery.
To illustrate the potential price dynamics, here’s a forecast chart based on current EIA projections for base case prices, contrasted with a hypothetical scenario where a revolution causes a temporary supply shock and price spike.
Historical data for 2025 is approximated from available quarterly averages.
Iraq’s Political Crisis: A Compounding Risk
As Iran grapples with hypothetical turmoil, Iraq faces real-time challenges that could spill over into energy markets. Entering 2026, Iraq contends with political uncertainty, economic fragility, and gridlock amid efforts to form a new government. Corruption, sectarian divides, and concentrated power have eroded stability, shifting public focus to fiscal woes like taxes and deficits. Despite progress toward peace and security, these issues threaten to disrupt oil operations.
Iraq’s oil sector is robust, with production at about 4.01 mbpd in November 2025 and exports averaging 3.2 mbpd in 2024. The U.S. imported over 73 million barrels from Iraq in the first nine months of 2025.
However, political instability could lead to:
Export Interruptions: Gridlock might delay infrastructure projects or escalate militia involvement, reducing output by hundreds of thousands of bpd.
Revenue Shortfalls: Crude export revenues are projected to fall to $84 billion in 2025, a four-year low, widening deficits and straining global supply if unrest intensifies.
Energy Dependencies: Iraq relies on Iranian gas and power for up to 40% of its electricity; disruptions from an Iranian revolution could cause blackouts, halting refineries and exports.
Recent halts in Iranian supplies underscore this vulnerability, forcing Iraq to seek alternatives like U.S. partnerships in oil fields.
Global Implications: A Tandem Threat
A revolution in Iran, combined with Iraq’s crisis, could remove over 5 mbpd from markets in a worst-case scenario—more than enough to trigger a price rally exceeding $100 per barrel. Asia, particularly China, would face the brunt, potentially reshaping trade flows and boosting U.S. shale output. Yet, diversification efforts in both nations—such as Iraq’s push for renewable energy and global deals—offer glimmers of resilience.
For energy stakeholders, vigilance is key. As Stuart Turley often highlights on the Energy News Beat, these Middle Eastern dynamics remind us that oil markets thrive on stability—but falter on uncertainty. Monitoring Tehran and Baghdad will be crucial in 2026.
Check out theenergynewsbeat.substack.com.
