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

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Author: Wen Zhang, Chief Economist at Huachuang Securities

Report Summary

Iran unrest appears to be calming, but the “Gray Rhino” geopolitical risks remain. This report mainly outlines Iran’s basic economic situation, focusing on natural resources, key industries, and export structure.

一、What has happened recently in Iran?

Economic difficulties have triggered protests across the country, gradually escalating into nationwide large-scale riots, with the highest casualties in recent turmoil. Starting in November last year, protests erupted in multiple regions due to rising prices and currency devaluation, then spread nationwide with violent clashes and large-scale casualties, including an 8-day internet blackout. By late January, the situation eased. On January 21, Iran’s official figures reported 3,117 deaths from recent unrest.

Geopolitical risks still exist. On January 22, Trump stated that a “large fleet” was heading toward Iran’s vicinity.

From a geographical perspective, Iran has strong control over the Strait of Hormuz. The Strait is a critical chokepoint for global energy trade, with about 20% of global oil and liquid fuel trade passing through it, accounting for roughly 27% of global maritime trade, and LNG trade passing through it making up about 20% of global LNG trade, and about 9% of global natural gas trade.

二、Iran’s main natural resources

1. Oil: Third largest proven reserves worldwide, with current production around 3.2 million barrels per day and exports about 1.8 million barrels per day. Proven reserves are approximately 200 billion barrels, second only to Venezuela and Saudi Arabia. By late 2025, Iran’s oil production is expected to account for about 3.2% of global output, with exports making up about 4.1% of global exports.

2. Natural Gas: Second largest proven reserves globally, third in production, but with limited direct exports. Proven reserves are about 17.1% of the global total, second only to Russia. In 2024, natural gas production will account for about 6.4% of global output, behind the US and Russia. Due to lack of LNG export facilities, Iran mainly relies on pipeline exports; in 2024, exports are less than 5% of production, only about 0.7% of global LNG exports.

3. Copper: High reserves but relatively low production share. Global copper reserves are about 980 million tons; Iran’s reserves are about 100 million tons, roughly 10%, ranking fourth worldwide, behind Chile and Peru, close to Australia. From January to October 2025, Iran produced about 320,000 tons of copper, about 1.7% of global production.

4. Other mineral resources: In terms of output, Iran is the second-largest producer of direct reduced iron, gypsum, and strontium, with shares of 25.8%, 10.6%, and 32.3% respectively; the fourth-largest producer of feldspar (7.1%), the sixth-largest of iron ore and kaolin (3.0% and 3.9%), and the seventh-largest of barite (excluding US), bentonite, and molybdenum (2.8%, 3.7%, and 1.4%). Reserves-wise, Iran is the top global reserve holder of barite and feldspar, eighth in fluorite and iron ore, with zinc reserves around 11,000–15,000 thousand tons, accounting for about 4.4–6% of global reserves, ranking 7th–8th worldwide.

三、Iran’s advantageous chemical industries

Based on its oil and gas resources and policy support, Iran has several competitive chemical industries, including two products heavily imported by China: 1) Methanol. Iran’s methanol capacity will reach about 17.16 million tons by 2025, making it the second-largest producer globally. Iran’s methanol exports to China will account for about 55% of China’s total imports, representing 7.5% of China’s apparent consumption. 2) Polyethylene. Iran’s polyethylene capacity will be about 4.5 million tons by 2025, about 2.8% of global capacity. China’s dependence on imports of polyethylene and high-density polyethylene (HDPE) is 30% and 35%, respectively, with Iran accounting for 9% of China’s polyethylene imports and 14% of HDPE imports.

四、Iran’s export structure

From a country perspective, China, Turkey, and India are Iran’s main export destinations. In 2023, exports to China, Turkey, and India accounted for approximately 35%, 16%, and 8%, respectively. In terms of products, polyethylene, iron ore concentrates, methanol, base metals (aluminum, copper, zinc), LNG are the main exports. Polyethylene accounts for about 12.8%, iron ore concentrates about 9.8%, methanol about 4.2%, aluminum and copper each about 4%, LNG about 3.4%, and zinc about 2.5%.

五、How do Iran-related geopolitical conflicts impact prices?

The most immediate short-term price impacts are on crude oil and methanol. For example, during the June 2025 Iran-Israel conflict, crude oil prices surged nearly 20%, and methanol prices increased over 10%. When the conflict subsided, within three trading days, crude oil prices fell about 15%, and methanol prices dropped around 6%.

Since January this year, amid internal unrest and threats of military intervention by Trump (January 2), crude oil prices have risen approximately 8.4%, and methanol prices about 1.7%.

For detailed analysis, see Huachuang Securities Research Institute’s report published on January 27: “[Huachuang Macro] Iran’s Geopolitical ‘Gray Rhino’: Which Prices Are Affected?”

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