On December 29 of last year (local time), merchants in Tehran, Iran, held a protest march across a bridge against economic hardships. As the Iranian anti-government protests, which began from anger over economic difficulties, escalate daily, the international community is closely watching the potential impact on international relations and the energy market. While the U.S. has kept military options against Iran open, there are discussions about the possibility of a large-scale violent incident or even the destabilization of the Khamenei regime.
Triggered by economic distress such as the collapse of the rial and soaring prices, the Iranian protests began on December 28 and have continued to spread for more than two weeks. According to major foreign media outlets like AP, despite the authorities’ violent suppression, dozens of citizens continued to protest even over the past weekend in Tehran and in numerous cities across Iran. The nature of the protests has recently shifted towards an anti-regime movement, foreign outlets assess.
William Usher, a former senior Middle East analyst at the CIA, stated through Bloomberg, “Iran is facing its most significant moment since 1979,” and noted that the Iranian regime seems to have increasingly limited opportunities and means to regain control. After the revolution in 1979, when the pro-American and pro-Western Pahlavi dynasty collapsed, Iran was reborn as an Islamic Republic with clerics holding practical power, and its foreign policy shifted 180 degrees towards anti-American and anti-Western stances.
U.S. President Donald Trump has indicated potential involvement in the Iranian situation, raising the level of pressure on Iran. According to the Wall Street Journal (WSJ), President Trump is expected to receive a briefing on the responses to the Iranian protests on the 13th. This suggests that President Trump’s warning of retaliation if the Iranian regime violently suppresses protesters could be translated into actual action. The U.S.’s response options reportedly include supporting online anti-government campaigns, conducting cyber-attacks targeting Iranian military and civilian facilities, imposing additional sanctions on the Iranian regime, and military strikes.
The energy market is also closely monitoring the situation in Iran, as potential disruptions in the supply of Iranian crude oil—4th in production within the Organization of the Petroleum Exporting Countries (OPEC)—could occur. Brent crude has surged over 5% since the 8th, surpassing $63 a barrel, amid speculation that the U.S. might use military options against Iran.
There are currently no signals of decreased exports due to the protests. However, attention is drawn as Reza Pahlavi, the son of Iran’s last monarch, who has recently emerged as a focal point for the protests, calls for a strike among the oil workers. The oil workers’ strike in 1978 played a crucial role in crippling the Iranian economy and signaled the end of the Pahlavi dynasty.
In the event of chaos resulting in the fall of the Iranian regime, there are projections that Russian President Vladimir Putin might also suffer significant impacts. With regime changes occurring in Russia-friendly Syria and Venezuela, Russia risks losing a key ally in the Middle East. Iran has emerged as a crucial military ally, providing drones and ballistic missiles to Russia in the Ukraine war.
The scenarios of escalating protests vary among experts. Johns Hopkins University’s Middle East Studies Professor Vali Nasr explained through Project Syndicate that, “The Islamic Republic is caught in a dilemma between the external threats from the U.S. and Israel and a large-scale popular uprising,” and added, “There is no easy exit from this deadlock. While the comprehensive collapse of the Islamic Republic is difficult to assert immediately, the end of the regime is approaching.”
On the other hand, Dina Esfandiary, a Middle East analyst at Bloomberg Economics, assessed that while the Islamic Republic may find it challenging to maintain its current form by the end of the year, the likelihood of a revolution is low. Observations suggest that the possibility of a leadership change or a coup by the Iranian Revolutionary Guard Corps (IRGC) is higher. She explained that if a coup occurs, social freedoms may expand, but political freedoms could shrink, and the diplomatic stance could become more hardline.
Regarding this, William Usher noted, “The collapse of the regime will not be smooth,” adding, “In the short term, minority groups and some regions may seek autonomy or secession, which could lead to a divided nation. If the IRGC responds firmly to protect the regime, there is a risk of large-scale violence.”