Why has Iran’s economy depended heavily on the oil industry?

Iran’s economy has remained heavily dependent on the oil industry primarily due to the country's vast natural resource wealth and the historical centralization of these assets under the national government. Iran possesses approximately one-tenth of the world’s crude oil reserves and holds significant natural gas deposits, which have served as the foundation for its foreign exchange income for decades.1

Following the nationalization of the oil industry in the 1950s and the subsequent expansion of production capacities by the National Iranian Oil Company, petroleum revenues became the primary engine for the nation's economic development. These revenues were frequently used to support a large public sector and various government-led infrastructure projects.21

Despite efforts to diversify, the economy remains anchored to this sector, partly because international sanctions and political isolation have restricted foreign investment and access to high technology, limiting the growth of other industries. Consequently, the government continues to rely on the extraction and export of hydrocarbons to sustain its economic objectives and provide public-sector employment.341