As Iran’s internal power struggle intensifies between hardliners and pragmatists, the outcome could significantly reshape Tehran’s foreign policy trajectory—potentially emboldening its regional ambitions while complicating diplomatic overtures with the West, including any future engagement with a possible Trump administration in 2025.
This evolving dynamic matters globally because Iran’s strategic decisions directly influence oil market stability, proxy conflicts across the Middle East, and the viability of nuclear non-proliferation frameworks. With Tehran’s regional allies like Hezbollah and the Houthis already active in multiple theaters, any shift in Iranian leadership could alter the calculus of deterrence and escalation from the Red Sea to the Levant.
The Fracture Within: Who Holds the Levers in Tehran Today
Iran’s current power contest is not merely ideological but institutional, pitting the Islamic Revolutionary Guard Corps (IRGC) against a fragmented civilian establishment led by President Ebrahim Raisi and the Expediency Discernment Council. Recent reporting indicates the IRGC has expanded its economic footprint to control over 30% of Iran’s GDP through sanctioned industries like petrochemicals and construction, according to the Brookings Institution. This economic dominance translates into political leverage, particularly as sanctions relief remains elusive.
Meanwhile, pragmatists within the bureaucracy—many aligned with former Foreign Minister Mohammad Javad Zarif—continue to advocate for limited engagement with Europe to ease economic pressure, even as Supreme Leader Ali Khamenei appears to be balancing both factions to preserve regime stability. The result is a dual-track approach: public defiance paired with backchannel diplomacy, a tactic historically used during periods of internal uncertainty.
How Tehran’s Internal Strife Ripples Through Global Markets
Iran’s internal power balance has direct consequences for global energy markets. As OPEC’s third-largest producer, any disruption to Iranian oil exports—whether from renewed U.S. Sanctions or internal sabotage—can tighten global supply. In March 2026, Iranian crude output averaged 3.1 million barrels per day, up from 2.4 million in early 2023 due to tacit acceptance by Western powers of limited exports to avoid regional flare-ups, per IEA data.
But this fragile equilibrium depends on Tehran’s internal coherence. Should hardliners consolidate power and pursue a more confrontational stance—such as enriching uranium to 90% or escalating Red Sea interventions—it could trigger preemptive measures from the U.S. Or EU, risking a sudden withdrawal of offshore investments and a spike in Brent crude volatility. Conversely, a pragmatic shift could unlock phased sanctions relief, increasing global supply and pressuring prices downward.
The Trump Factor: Why Tehran’s Internal Drama Matters to Washington
Should Donald Trump return to the White House in January 2025, his administration’s Iran strategy will hinge on perceiving Tehran as either weak and negotiable or emboldened and dangerous. A perceived power vacuum or ideological shift toward hardliners could reinforce Trump’s “maximum pressure” framework, potentially triggering renewed sanctions on Iran’s oil sector and secondary penalties on Asian buyers.
“Iran’s internal coherence determines its external predictability. If the IRGC continues to eclipse civilian authority, we’re not dealing with a rational actor in negotiations—we’re dealing with a military-industrial complex that benefits from confrontation.”
— Trita Parsi, Executive Vice President, Quincy Institute for Responsible Statecraft, interview with Foreign Policy, March 2026
This assessment underscores a critical gap in Western analysis: the assumption that Tehran speaks with one voice. In reality, competing power centers mean that agreements signed by moderates can be undermined by hardline factions controlling military or economic levers—a dynamic that doomed the JCPOA’s longevity after 2018.
Regional Ripple Effects: From Yemen to the Golan Heights
Iran’s internal dynamics similarly shape the behavior of its proxies. The Houthis in Yemen, who have launched over 200 drone and missile strikes on Red Sea shipping since November 2023, receive not only financial support but also tactical guidance from IRGC-Quds Force commanders. If hardliners gain ascendancy, such operations could intensify, further disrupting global trade routes through Bab el-Mandeb.
Similarly, Hezbollah’s arsenal in Lebanon—estimated at 150,000 rockets and missiles by the CSIS—remains dependent on Iranian funding and smuggling routes via Syria. Any disruption to Tehran’s internal logistics networks, whether from factional infighting or economic strain, could degrade supply chains to these groups, altering the balance of power in southern Lebanon and northern Israel.
| Indicator | Value (2024–2025) | Source |
|---|---|---|
| Iran’s share of OPEC oil production | 9.2% | OPEC |
| IRGC-controlled % of Iran’s GDP | Over 30% | Brookings Institution |
| Iranian crude oil output (March 2026) | 3.1 million barrels/day | IEA |
| Estimated Hezbollah rocket arsenal | 150,000+ | CSIS |
| Houthi attacks on Red Sea vessels (since Nov 2023) | Over 200 | UN News |
The Bottom Line: Watch the Purse, Not Just the Pulpit
For global investors and policymakers, the true signal of Iran’s internal direction lies not in Friday sermons or parliamentary debates, but in who controls the customs basins at Bandar Abbas, who signs off on petrochemical contracts with China, and who commands the IRGC’s asymmetric warfare units. These are the levers that determine whether Iran becomes a destabilizing force or a cautious actor in an already volatile region.
As the world watches for signs of a Trump comeback, Tehran’s internal struggle may ultimately decide whether the next chapter brings renewed confrontation—or a fragile, transactional calm. The outcome won’t just shape Persian Gulf security; it will influence energy prices, shipping costs, and the risk calculus from Brussels to Bangkok.
What do you think—does Iran’s internal power struggle make diplomacy more likely, or does it harden the path toward conflict? Share your perspective below.
