Iran’s economy has long been characterized by a high dependence on oil revenues, a feature that has significantly influenced the country’s macroeconomic stability. One of the most critical historical episodes illustrating the consequences of this dependence is the oil shock of the 1970s, when the sharp rise in global oil prices led to an unprecedented increase in Iran’s oil income. While this surge initially stimulated rapid economic expansion and government spending, the absence of effective institutional mechanisms for managing these revenues contributed to rising liquidity, growing aggregate demand, and ultimately significant inflationary pressures. This study examines how the sudden increase in oil revenues during the 1970s contributed to inflation and structural imbalances in the Iranian economy. Using a historical–analytical approach within the framework of political economy, the research analyzes both quantitative data—including oil revenues, government expenditures, liquidity growth, GDP, and inflation—and qualitative sources such as historical documents and economic reports. The findings indicate that a large share of oil revenues was allocated to government spending, large-scale imports, and non-productive sectors, while investment in domestic productive capacities remained limited. This imbalance led to a widening gap between aggregate demand and domestic supply, intensifying inflationary pressures. The study concludes that ineffective management of oil revenues within a rentier economic structure contributed significantly to macroeconomic instability. The experience of the 1970s highlights the importance of institutional mechanisms, prudent fiscal management, and investment in productive sectors for ensuring long-term economic stability in resource-dependent economies such as Iran.