Principal industries are oil refining, petrochemicals, steel, and copper. In 1987, there were six primary refineries—at Abadan, Bakhtaran, Tehran, Shiraz, Esfahan, and Tabriz—with a potential capacity of 950,000 barrels per day. In late 1980, Iraqi bombing forced the closure of the Abadan refinery, which had a total capacity of 600,000 barrels per day and was one of the world's largest refineries. Several other refineries suffered lesser damage during the war. The Kharg Island oil terminal also was severely damaged by bombing in 1985. Construction by a Japanese consortium of a $4-billion petrochemical complex at Bandar-e Khomeini, near the Iraqi border, was halted by the war; by mid-1983, the installation, which was 85% complete, had already been attacked six times. In September 1984, the Japanese withdrew their technicians from the site because of renewed Iraqi bombing. Iran has taken on much of the financial responsibility for the plant, and the ending of all payments of Japanese credits and loans in February 1986 most likely meant that the plant would never be completed according to the original plans. After the ceasefire in 1988, Iran began to rebuild its damaged oil export facilities, concentrating mainly on the rehabilitation of Kharg Island. A 500,000-barrel reservoir terminal at Uhang Island was put into operation in March 1993. The oil complex on the southern island of Lavan was reopened after reconstruction at the end of April 1993. The Abadan refinery became again operational at 200,000 barrels per day in May 1993. Isfaran's oil production unit became operational in 1992/93, while the construction of a new refinery at Bandar Abbas was underway. Major refinery products are motor fuel, distillate fuel oil, and residual fuel oil. Oil refining manufacturers had a combined capacity of 1.47 million barrels per day in 2000.
The natural gas industry has boomed in Iran, with the third-largest proven reserves in the world. In 1990, the site was appraised at one-eighth of its true size, which was discovered in 1996. In 1998, Iran produced 1.9 trillion cubic feet of natural gas.
The Abadan plant for the production of plastics, detergents, and caustic soda was completed in the 1960s. Since then, the petrochemical industry has expanded considerably. It has been the main element of the post-war industrialization program. The heavy metals industry began in 1972 with the start of steel production at Esfahan National Steel Mill in Esfahan. It was also given priority by the Rafsanjani government. Manufactured goods include diesel engines, motor vehicles, television sets, refrigerators, washing machines, and other consumer items.
The textile industry has prospered in recent years with increased production of cotton, woolen, and synthetic fabrics. The making of handwoven carpets is a traditional industry in Iran that flourishes despite acute competition from machine-made products. However, carpet exports declined throughout the war years. To promote self-sufficiency, Iran has encouraged development of the food-processing, shoemaking, paper and paper products, rubber, pharmaceutical, aircraft, and shipbuilding industries. Other industrial products include cement, nitrogenous fertilizer, phosphate fertilizers, and refined sugar.
Iran's industrialization program was set back by the political turmoil and labor disruptions of the late 1970s and by the revolutionary government's nationalization of industries in the summer of 1979, causing a flight of capital and trained managers. However, the sector recovered somewhat by 1983/84, when industrial production registered a 23% gain, according to the government.
A more recent development plan (1989/90–1993/94) has increased funding to develop heavy industry. A privatization decree in June 1991 led to the identification of 390 public manufacturing and trading firms for divestiture; of these, 185 were already been divested. Industrial production grew at a rate of 5.3% from 1988 to 1998, as opposed to a -3.4% rate during the 1970s. Market reforms were set to continue after 2000.