As dams run dry, Iran’s electricity grid risks summer collapse
Iranian officials are sounding alarms over a deepening water crisis that has already affected nearly four dozen major dams, threatened electricity production, and forced Tehran into rolling blackouts.
Somayeh Rafiei, the head of the environment faction in Iran’s Parliament, warned on Tuesday that “the water situation in 44 of the country’s dams is critical,” adding that this has directly impacted hydroelectric power generation, putting spring and summer electricity supply under serious strain.
According to Rafiei, water inflow to dam reservoirs from the beginning of the current hydrological year (which began in September) has dropped by 37% compared to the same period last year. The total volume of water in reservoirs is also down 18% from a year ago and 15% below the five-year average.
“The situation of five dams in Tehran province is especially alarming,” Rafiei said. “Only 24% of their capacity is filled, and upstream snow reserves – a crucial source for replenishment – have declined between 47% and 54% year-on-year.”
She also raised concerns over the Urmia Lake basin in northwestern Iran, where dam fill levels have declined 36% from last year. “We are looking at hard days ahead for Lake Urmia,” she warned.
A view from Lake Urmia
The crisis is exacerbated by climate change, mismanagement in agriculture, outdated irrigation techniques, and a failure to invest in water recycling or secure regional water diplomacy, Rafiei said.
She painted a dire picture of groundwater depletion, noting that 30 of Iran’s 31 provinces are experiencing land subsidence due to unchecked groundwater extraction. “This is a systemic failure of regulation,” she said.
Rafiei also pointed to environmental degradation, saying that 66% of the country’s wetlands have dried up and become new sources of dust storms.
The hydropower sector is reeling, with over 12,500 megawatts of capacity affected. “As temperatures rise, electricity production becomes increasingly unstable due to the country’s energy imbalance and lack of investment in renewable infrastructure,” she said. “There is no solution right now except widespread compliance with consumption guidelines.”
Rafiei said the situation requires the Ministry of Energy and provincial governors to immediately implement real-time monitoring across all public institutions and government-affiliated companies, including mandatory installation of smart meters and online tracking systems.
“We cannot demand conservation from ordinary citizens while leaving high-consumption government bodies unchecked,” she said.
Blackouts return to Tehran
The capital began scheduled power outages again this week, according to a notice issued by the Tehran Electricity Distribution Company, following unannounced outages in neighboring towns.
The return of outages coincides with a heatwave that has sharply driven up water usage.
Energy Minister Abbas Aliabadi confirmed that annual renewable water resources have dropped by 37%, from 103 billion to 66 billion cubic meters – a drastic fall from the historical high of 130 billion.
Speaking at a national meeting with water and wastewater officials, Aliabadi said: “We are facing a global water crisis. The Middle East is at its epicenter, and Iran’s situation is increasingly concerning.”
He warned that rising urban populations in Tehran and other large cities are intensifying pressure on water supplies, and stressed the need for urgent investments in water recycling and desalination technologies.
“In many cities, treated drinking water is still used for irrigating green spaces. That is no longer acceptable,” he said.
Aliabadi cited a 7°C increase in Iran’s average temperature over the past two years – a result of a 4.5°C rise this year on top of 2.5°C last year. This spike has further fueled water consumption, particularly through evaporative coolers.
Meanwhile, many of Iran’s authorized wells have dried up, including those with depths of as much as 150 meters.
“Water is an intergenerational asset, and its management demands strategic decisions,” Aliabadi said.
A hard water year ahead
Deputy Energy Minister Mohammad Javanbakht echoed the warnings, saying: “After years of consecutive droughts, this will be one of the toughest years for Iran’s water sector.”
He cited over 40% drought conditions nationwide, declining reservoir levels, and the drying of key water bodies, including many reservoirs at or below critical thresholds.
“The drinking water situation in cities like Tehran is already difficult, and agricultural restrictions may spark social tensions,” he warned.
While acknowledging some prior attempts at groundwater rebalancing and drought adaptation, Javanbakht admitted the measures had limited impact.
Javanbakht also highlighted the economic strain on the water sector. “There are nearly 5,670 water projects across the country, and securing funds for them in the current economic climate is incredibly challenging,” he said.
He called for tariff reforms, public education, and stronger integration of social and environmental concerns into water infrastructure planning.
Tehran’s water use surges
Recent data from the Tehran Water and Wastewater Company shows a worrying trend with the capital experiencing one of its driest years in recent decades, annual rainfall now below 140 millimeters.
Despite this, water consumption surged past 3.1 million cubic meters per day in early May – largely attributed to the use of swamp coolers, which consume up to 30 liters of water per hour per unit.
Officials have called on citizens to reduce their cooling system usage and improve efficiency, including installing shades and conducting regular maintenance.
Water authorities have threatened punitive measures will follow what they consider to be overuse, warning that persistent heavy users may even face 12-hour service cuts.
As Iran braces for a long, hot summer, officials agree: behavioral change is not optional.
“Without a significant shift in how we consume and manage water, this crisis will only deepen,” Minister Aliabadi warned.
Turkey's state-owned Halkbank has asked the US Supreme Court to review a lower court decision that allows it to be prosecuted for allegedly helping Iran evade American sanctions, a lawyer for the bank said on Monday.
The Supreme Court had set a Monday deadline for Halkbank to file a petition appealing the October 2024 ruling by the 2nd US Circuit Court of Appeals in Manhattan, which cleared the way for the prosecution.
In a letter to the appeals court, Halkbank's lawyer Robert Cary confirmed the petition had been filed, though it was not immediately available on the Supreme Court's website.
Halkbank has pleaded not guilty to charges of fraud, money laundering, and conspiracy, accused of using money servicers and front companies in Iran, Turkey, and the United Arab Emirates to circumvent US sanctions.
US prosecutors allege that Halkbank facilitated the secret transfer of $20 billion in restricted Iranian funds, converted oil revenue into gold and cash for Iranian interests, and fabricated documentation for food shipments to justify oil proceeds transfers.
The case, initiated in 2019, has strained relations between the US and Turkey, with Turkish President Tayyip Erdogan denouncing it as an "unlawful, ugly" step.
However, both Erdogan and US President Donald Trump reported a productive phone call on Monday, with mutual invitations to visit their respective countries.
It is Halkbank's second appeal to the Supreme Court. In 2023, the court ruled that while the Foreign Sovereign Immunities Act of 1976 shields foreign countries from civil liability, it does not extend to criminal cases.
The Supreme Court then instructed the 2nd Circuit to further examine whether common law immunity protected Halkbank, leading to the October ruling that the bank could be prosecuted.
Trump maintains his so-called maximum pressure campaign against Iran, threatening secondary sanctions and targeting those aiding sanctions evasion, while indirect nuclear talks between the US and Iran continue.
Iran’s escalating water crisis is not only draining its aquifers but also laying the groundwork for potentially devastating earthquakes, a leading geology expert warns.
Mehdi Zare says human responses to prolonged drought—particularly rampant groundwater extraction—are altering underground stresses and could trigger seismic activity in cities like Tehran, Isfahan, and Mashhad.
“Droughts can indirectly influence seismicity through human activities, particularly over-extraction of groundwater, which alters subsurface conditions,” Zare wrote on Rokna news Saturday.
These shifts may activate critically stressed faults, he added, especially in tectonically sensitive regions.
As aquifers are depleted, the earth’s crust begins to rebound, redistributing pressure and modifying fault dynamics. This process, compounded by reductions in pore pressure, brings fault lines closer to rupture.
In some areas of Tehran, groundwater levels are falling by up to two meters a year. Land subsidence has reached 31 centimeters annually in parts of southwest Tehran, according to government data released in March.
The 2017 Malard earthquake near Tehran, which measured magnitude 5.0, occurred near one such subsiding zone. Zare notes that similar patterns have been observed in California, India, and Spain, where changes in groundwater levels preceded swarms of small but revealing earthquakes.
Ali Beitollahi, head of earthquake engineering at Iran’s Ministry of Housing research center, warned of a destructive cycle. “Population grows, water becomes scarce, more dams and wells are built—and so we drill again,” he said.
He criticized the government’s approach, which focuses on securing more water rather than managing demand. “We are now hearing plans to drill deep wells in Tehran this summer,” Beitollahi said. “Our mismanagement is taking us to a dangerous place.”
Iran’s water reserves have fallen to critical levels, accelerating the risk of shortages and forcing officials to consider rationing months before peak summer demand.
Tehran's water supply is critically strained as key dams plummet to record lows, worsening a nationwide drought. Latian and Mamlou dams are at 12% capacity, Lar at 1%, and Karaj at 7%.
Nationwide rainfall is 82.9% of normal, and dam inflow is only 42%. Officials urge a 20% reduction in water use, as 19 provinces face water stress.
With 40 percent of Tehran’s aquifer already depleted and critical urban centers still expanding, experts say the time to act is rapidly closing. Without structural water governance reform and population redistribution, Iran risks turning drought into disaster—both above ground and below.
Iran’s currency fell sharply on Saturday after a planned fourth round of indirect talks with the United States was postponed, as sharp disagreements over uranium enrichment and inspections cast doubt on prospects for a breakthrough.
The rial dropped past 870,000 to the US dollar in Tehran’s open market, reversing gains made earlier last month during previous rounds of diplomacy in Oman. The currency had recovered to around 795,000 following the third round but slid again amid rising uncertainty.
US Secretary of State Marco Rubio said Thursday that Iran must end all uranium enrichment and open all nuclear facilities, including military sites, to American inspectors if it wants to avoid “serious consequences, including potential military action.”
“There’s no reason for enrichment unless you want a weapon,” Rubio told Fox News, adding that Iran must also abandon support for proxy groups and halt long-range missile development.
Iranian Foreign Minister Abbas Araghchi on Friday dismissed Rubio’s demands, warning that such “maximalist positioning and incendiary rhetoric achieve nothing except eroding the chances of success.” He said Iran has “every right to possess the full nuclear fuel cycle as a founding signatory to the NPT.”
“A credible and durable agreement is within reach,” Araghchi said. “All it takes is firm political will and a fair attitude.”
The International Atomic Energy Agency (IAEA) has confirmed Iran is the only non-nuclear-armed country enriching uranium to 60%.
No official reason has been given for the postponement of this weekend’s round. Iranian officials have acknowledged lingering disagreements over both general principles and technical details.
The rial had plunged to a record low of around 1,058,000 per dollar in early April before stabilizing during earlier rounds of talks.
President Masoud Pezeshkian’s campaigned on transparency, but his administration is presenting inflated and misleading data about Iran’s energy sector in an apparent bid to soothe public dissatisfaction with deepening blackouts.
In recent months, authorities have repeatedly cited sizeable increases in gasoline and natural gas production and some officials have even assured the public that this summer’s looming electricity shortfall will be resolved.
But a confidential document from the Oil Ministry obtained by Iran International shows these claims are not only inaccurate, but the country's energy shortages are in fact accelerating.
Iran currently suffers from year-round energy deficits. During peak demand season, electricity and natural gas shortages climb as high as 25%, while the gasoline shortfall reaches 30%.
With energy development projects stagnating, officials have turned to optimistic public messaging, using spurious statistics to suggest improvement that their own confidential data shows does not exist.
In late 2024, Mohammad-Sadegh Azimifar, CEO of the National Iranian Oil Products Distribution Company, said the country’s daily gasoline output had increased by 10 million liters, and diesel by 13 million liters over the past year.
However, a confidential internal report from the same company shows base gasoline production at Iranian refineries increased by only 1.5 million liters in late 2024 compared to the same period in 2023. Even for the entire year, the growth was just 3.5% or just 3.76 million liters per day.
Diesel output showed similarly modest growth—just 3% or 3.38 million liters per day for the year. Meanwhile, consumption of both fuels jumped by 7.5% in 2024, or 7 million liters per day, further deepening Iran’s fuel deficit.
Despite the absence of any new refineries in recent years, the government has continued to push over 1.5 million low-efficiency domestically manufactured vehicles into the market annually—adding more strain on fuel demand.
In 2024, Iran’s daily base gasoline production was around 101 million liters, while consumption topped 123 million liters.
Gasoline output lags consumption as additive use in fuels rises
Boosting additives
The government’s main strategy for managing this growing gap, according to the Oil Ministry report, has been to dilute refinery-grade gasoline with large volumes of substandard additives.
These additives include various chemical compounds, fuels from petrochemical plants, and the controversial chemical MTBE—a compound banned in many Western countries due to its environmental and health hazards—as well as industrial octane boosters.
While additive use stood at just 5 million liters per day or 6% of total gasoline in 2018, it now exceeds 20 million liters or over 20% of the fuel supply, raising serious concerns about air quality and public health.
The same confidential report also revealed that only one-quarter of gasoline produced in Iranian refineries meets European standards and even within that limited share it is not fully clear whether the fuels truly adhere to required specifications.
Gas production: claims versus reality
The head of South Pars Gas Complex recently announced a 6 billion cubic meter increase in gas fed into the national grid in the last fiscal year, ending on March 20. The South Pars field alone accounts for 73% of Iran’s natural gas supply.
Simultaneously, the CEO of the Iranian Central Oil Fields Company—which provides around 25% of the nation’s gas—said the company boosted production by 10 million cubic meters per day during the autumn and winter, equating to at least 2 billion cubic meters of annual growth.
Based on these statements, Iran should have increased its gas production by at least 8 billion cubic meters last year.
However, international institutions such as the International Energy Agency (IEA) and the Gas Exporting Countries Forum (GECF)—of which Iran is a member—have both estimated Iran's gas output growth at only around half that amount.
From 2010 to 2020, Iran enjoyed annual gas production growth rates above 5%. But from 2021 to 2024 the rate has fallen to around 2% on average. The IEA forecasts that in 2025, gas production will rise by just over 1%.
The administration of Iranian President Masoud Pezeshkian is preparing to disqualify wealthier citizens from the country’s long-running cash handout program to save government funds as economic headwinds mount.
The program has persisted, with various reforms, for 15 years despite being blamed for distorting the economy and stoking inflation.
Now, Pezeshkian’s government is poised to introduce its own changes to ease the strain on a budget hollowed out by years of sanctions and economic mismanagement.
The proposed exclusion of wealthier households signals a shift towards a more needs-based support system as Iran grapples with persistent economic challenges.
About 30 percent of Iranians live below the poverty line. By removing roughly 18 million recipients from the program, the government aims to reduce fiscal pressure and redirect funds toward low- and middle-income families hardest hit by years of 30-40 percent annual inflation.
In the current fiscal year Pezeshkian’s government has allocated 3,240 trillion rials or about $4 billion at the current open market exchange rate, for cash subsidies.
The figure is separate from the extensive indirect subsidies provided to keep prices of fuel, electricity, water, essential foods, and medicine low.
Since the introduction of the latest subsidy reforms by former president Ebrahim Raisi's administration in May 2022, the rial has devalued by around 185 percent, from 280,000 to approximately 800,000 rials per US dollar as of April 27, 2025.
Consequently, the real value of monthly cash payments has fallen dramatically, now worth just about $3.74 to $5 per person for target groups.
Origins of Iran's cash subsidy program
The cash subsidy system began in 2010 under the populist government of Mahmoud Ahmadinejad, building on a controversial proposal made by his reformist opponent Mehdi Karroubi during the disputed 2009 presidential election.
Karroubi had promised a universal cash payment of 500,000 rials (around $50 at the open market exchange rates at the time) per person without a clear funding plan, drawing sharp criticism over its potential inflationary effects.
Ahmadinejad’s administration launched the Targeted Subsidy Reform Plan in late 2010, paying 450,500 rials (about $40) monthly to each citizen.
Funded by cuts to energy and utility subsidies, the program initially boosted Ahmadinejad’s popularity but quickly lost value as inflation and currency devaluation took hold. By August 2013, the real value of the handout had dropped to about $15 per person.
Rouhani’s response: the livelihood subsidy
Hassan Rouhani’s moderate administration (2013–2021) attempted several times to remove higher-income households from the universal program, but efforts faltered due to the absence of a transparent tax database.
As economic pressures mounted, the government introduced an additional "livelihood subsidy" in late 2019 after a sharp increase in fuel prices triggered widespread unrest.
This new subsidy targeted lower-income groups, offering payments based on household size to about 60 million Iranians.
Single-member households received 550,000 rials per month (just over $4 at the time), with smaller amounts paid per person to members of larger families.
Raisi’s changes: new tiers and e-vouchers
Facing deepening economic challenges, Ebrahim Raisi’s hardline government restructured the cash subsidy system in May 2022.
Monthly payments to the highest-income 10 percent of the population were eliminated, while remaining recipients were divided into two groups: the poorest 30 percent received 4 million rials (around $14) monthly, and the middle 60 percent received 3 million rials (about $11).
To further curb inflationary pressures, in February 2023 Raisi’s administration introduced a voluntary scheme allowing families to receive their subsidies as store credit instead of cash.
Participants could use their credits to purchase a list of 11 subsidized essential food items such as rice, cooking oil and dairy products from designated stores.