Steel Strikes: How the US-Israeli War Delivered a Severe Blow to Iran’s Economy

In late March and early April 2026, amid the escalating conflict between the United States, Israel, and Iran, airstrikes targeted two of Iran’s largest steel production complexes. The attacks hit Mobarakeh Steel near Isfahan — the biggest steel producer in the Middle East — and Khuzestan Steel in Ahvaz. These strikes caused significant damage to storage facilities, power infrastructure, and parts of the production lines, sending shockwaves through Iran’s already strained economy.


A Major Setback for Production and Exports


Iran’s steel industry stands as one of the country’s most important non-oil sectors, providing vital foreign currency earnings despite long-standing international sanctions. In 2025, Iran ranked among the world’s top crude steel producers with an annual output of around 31.8 million tons. Mobarakeh Steel alone contributed hundreds of millions of dollars in export revenue in the period leading up to the war.


The strikes damaged electrical substations, alloy steel production lines, and storage areas at both facilities. Khuzestan Steel reportedly halted operations following the initial attacks, while Mobarakeh continued running at reduced capacity despite the damage. Experts anticipate a noticeable drop in Iran’s ability to produce and export semi-finished steel products such as billets and slabs. This disruption weakens a key source of revenue at a time when the country can least afford it.


Broader Economic Damage and Long-Term Risks


Steel production depends heavily on a steady electricity supply. When power infrastructure is hit, the effects ripple far beyond the damaged units, affecting neighboring production lines and downstream industries like construction and manufacturing. Initial assessments suggest direct losses could reach billions of dollars, but the wider impact on the national economy — through disrupted supply chains and reduced industrial activity — may prove even greater.


As the war drags on, Iranian resources are increasingly diverted toward military efforts, leaving less room to address the country’s existing challenges of sanctions, inflation, and economic mismanagement. Some damaged sections may be repaired within months if the harm is limited, but others operate on thin profit margins. In those cases, rebuilding could become economically unviable, making it cheaper for Iran to import steel than to restore the facilities. If key units are never fully rebuilt, the country’s steel output could remain permanently lower, weakening supply chains for years to come.


Impact on Workers and Everyday Lives


The human cost extends well beyond the factories. Khuzestan Steel alone employs around 10,000 workers, many of them contractors with limited job security. A prolonged shutdown threatens their livelihoods and ripples outward to subcontractors and related industries. For ordinary Iranians, these strikes represent more than an attack on industrial sites — they strike at a sector that helps sustain a significant part of the national economy.
In the eyes of many inside Iran, the debate has centered on whether the plants were legitimate military targets due to their links to state revenue and broader networks. Yet the longer-term concern lies in the potential irreversible damage to one of the few industrial pillars still standing under heavy pressure. If the conflict ends without major political shifts and with sanctions remaining in place, the loss of skilled workers who may choose to leave the country could make any future recovery even more difficult.


Ultimately, the steel strikes highlight how the war is striking at the heart of Iran’s civilian economy. While the immediate focus remains on military developments, the damage to this strategic sector risks leaving lasting scars that extend far beyond the factory gates, affecting jobs, exports, and the country’s overall resilience for years to come.