Oil, gas and Iran economic analyst
Iran’s Central Bank’s latest quarterly report shows capital flight hit a historic peak in the spring of 2025, underscoring the depth of the country’s financial strain.
The city’s water resources are in exponential decline, Reza Haji-Karim, head of Iran’s Water Industry Federation, told the website Didban Iran.
“Water rationing should have started much earlier. Right now, 62 percent of Tehran’s water comes from underground sources, and the level of these aquifers has dropped sharply.”
The crisis, he said, is the result of years of neglecting scientific warnings about groundwater depletion and climate change.
“The only way to save Tehran is through a chain of measures – from wastewater recycling and consumption reform to cutting agricultural water use,” he added.
Unannounced rationing begins
Residents of Tehran have reported repeated overnight water cuts in several districts in recent days. The Tehran Water and Wastewater Company said the outages are intended to refill storage tanks and prevent the city’s distribution network from collapsing.
Local media outlets reported that nightly rationing has already started in parts of the capital and now continues until early morning hours.
The government may be forced to reduce water pressure to almost zero at night when demand is low, Energy Minister Abbas Aliabadi said Saturday, urging households to install storage tanks.
"Pipeline infrastructure in our country is more than 100 years old; the pipes have become worn out, and some of them were also damaged during the 12-day war" with Israel in June, the minister said.
Presidential warning and vanishing reserves
President Masoud Pezeshkian warned on Thursday that if rainfall does not resume by the end of autumn, Tehran will face water rationing, adding, “If it still doesn’t rain, we will have no water and will have to evacuate the city.”
The Tehran Regional Water Company has said that the capital’s five major dams are now only 11 percent full.
Ali Shariat, secretary-general of the Water Industry Federation, blamed the deepening crisis on “mismanagement and fragmented decisions in agriculture and industry.”
“My honest advice to the public is to take the president’s words very seriously. He has told the truth – bitter but undeniable,” he added.
“Continued inaction may lead to forced migration from Tehran,” Shariat added.
Dams near collapse
A video posted on social media on Thursday showed the dry bed of the Latian Dam near Tehran, whose manager said only half of its remaining 10 percent capacity can be used. Officials in neighboring Alborz province reported that the Karaj Dam is now more than 90 percent empty, with only seven percent of its reservoir remaining.
Tehran, home to nearly nine million people, depends on five dams – all reporting sharp declines.
The Laar and Mamloo reservoirs are at 1% and 7% capacity respectively, while only Taleghan remains above one-third.
This comes as the meteorological organization forecasts no significant rainfall for the rest of November.
Tehran is experiencing one of the driest periods in the past 50 years, according to the energy ministry. If current trends persist, officials warn, the city may run out of drinkable water within weeks.
Residents say water has been shut off from midnight until around 5 a.m. in recent nights.
“Despite repeated denials by officials, it appears the process of rationing has started” and citizens in parts of the capital “are deprived of water during the night,” Mizan News Agency, affiliated with the judiciary, wrote.
The daily Haft-e Sobh likewise reported sudden five-to-six-hour overnight cuts in drinking water across several districts, all without prior notice.
Reduced pressure across the city, the paper said, and declining surface and groundwater reserves had led to “serious instability” in Tehran’s water network.
The outages have lasted long enough to affect even households with backup storage tanks, according to the report.
Rising frustration
Haft-e Sobh quoted residents as saying the sudden shutdowns disrupted daily life. “When the water is cut off at night, we don’t know when it will return, so we can’t plan our use. Even tanks empty quickly,” one resident said.
President Masoud Pezeshkian warned on November 6 that if rain does not arrive by December, water will have to be rationed across Tehran, adding that prolonged drought could even force evacuation of the city.
The head of Tehran’s provincial water company recently described the capital’s situation as “red and concerning.”
Health and cost concerns
Unannounced rationing, Haft-e Sobh warned, could hinder hygiene and household routines dependent on steady water access. Unreliable supply may increase health risks in residential buildings and impose higher costs on families forced to rely on water tanks or delivery services, it added.
Meteorological data show 20 provinces have gone more than six weeks without measurable rainfall.
No precipitation has fallen in Tehran since the start of autumn, Mohammadreza Kavianpour, head of Iran’s Water Research Institute, said on Thursday warning that forecasts show the drought is likely to persist through the season.
“The risk of water scarcity in the capital must be taken very seriously,” Kavianpour said.
Tehran’s supply depends heavily on the Karaj Dam, whose remaining reserves are sufficient for only two weeks of drinking water.
Environmental experts say years of over-extraction, unscientific dam-building and poor management have pushed the country toward what some describe as “water bankruptcy.”
The report, published on the Bank’s website, puts the capital account balance in the first quarter of the fiscal year (beginning March 21) at around minus $9 billion, the highest outflow ever recorded.
Last year, capital flight totaled about $20.7 billion, triple the figure in 2020. If this year’s pace continues, outflows could reach $36 billion by March 2026, roughly 10 percent of Iran’s GDP.
It remains unclear how much of the current exodus reflects ordinary citizens moving savings abroad versus businessmen or individuals close to power.
Earlier this year, Hossein Samsami, a member of parliament’s Economic Committee, said that from 2018 to the end of 2023, $95 billion in non-oil export revenues never returned to Iran.
Declining foreign trade
Central Bank data show around $80 billion in capital flight between 2018 and 2024, suggesting much of the outflow is tied to foreign trade channels. Yet Iran’s economy minister recently insisted that the private sector accounts for only 15 percent of the country’s foreign trade.
That gap points to individuals with government links or ties to quasi-state institutions, including the Revolutionary Guards, as key drivers of tens of billions of dollars leaving the country.
The report also shows a sharp drop in export revenues. Oil income, including crude, petroleum products, and gas, fell by $3 billion in the spring compared to the same period last year, totaling $15 billion. Non-oil exports slipped by another $1 billion to under $11 billion.
Imports declined by about $800 million to $17.2 billion, while the services trade balance turned negative at minus $2.8 billion.
Overall, Iran exported $6 billion more in goods and services than it imported this spring. Yet $9 billion left the country during the same period through capital flight, erasing the surplus on paper.
Worse to come?
The deficit may rise if oil prices or exports drop—as seems to be the case according to most recent information.
Tanker-tracking data from Kpler show Iranian oil offloading at Chinese ports has fallen in recent months to about 1.2 million barrels per day, down from an average of 1.44 million earlier in the year.
Amid the tightening squeeze, officials continue to warn of severe foreign-currency shortages and the Central Bank’s inability to finance imports or investment.
Meysam Zohoorian, a member of parliament’s Economic Committee, reported this week that the Planning and Budget Organization has told lawmakers it is “stuck with three billion dollars” needed for investment in oil fields.
President Masoud Pezeshkian painted an even darker picture, asserting that his administration can hardly source a third of that amount for development projects.
“We are negotiating over one billion dollars to figure out where to find it,” he said.
