Investigating the Effects of Iran’s Oil and Gas Industries’ Sanctions on the Macroeconomic Variables with the Emphasis on Confronting the Vulnerability of Oil Export Revenues

Economic sanctioning is the means of achieving the foreign policy goals, and so far, the Islamic Republic of Iran has been the target of various trade and financial sanctions from Western countries. In recent years, we have witnessed the sanctions against Iran have been intensified especially in the field of energy. The imposers of the sanctions on Iran, aiming the economically vulnerable sectors, have targeted the oil and gas industries as the most important source of national revenue for the country. Regarding the dependency of Iran’s economic structure on the oil revenues, the consequences of sanctions in the oil sector, in which has three different types (ban on oil export, sanctions on upstream oil and gas industries, and downstream ones), will be exacerbated. The sanctions on energy sector have some consequences such as a sharp decline in foreign exchange revenues, reduction in foreign investment and a decrease in the importation of desired goods and equipment, and in this manner, it would make some impacts on the macroeconomic variables including economic growth, inflation and unemployment. Meanwhile, we have to notice that the problems caused by energy sanctions are rooted in our inappropriate use of the hydrocarbon sources and our spending the revenues from them. In this research, first, we make use of the theoretical studies to investigate how sanctions on oil and gas would have impacts on macroeconomic variables. Then, regarding the conducted qualitative analysis, we conclude that Iran as a developing country and as a crude oil exporter has been affected by the shocks of oil’s foreign exchange revenues. We found that the foreign exchange shocks resulting from oil revenues are the Achilles heel of Iran’s economy.