Iran's capital city, Tehran, on a rare day of no air pollution
Recent tremors outside Tehran this month have underscored the threat of a catastrophic earthquake to the capital built on fault lines, adding to the dread of inhabitants also grappling with water shortages, power cuts, and pollution.
Two overnight earthquakes, measuring 3.0 and 3.3 in magnitude, struck Varamin—a densely populated and impoverished town southeast of Tehran—on March 14. While the tremors were felt in the southern parts of the capital, no casualties were reported.
Just a day before the incident, a member of Iran's International Institute of Earthquake Engineering and Seismology (IIEES) warned that Tehran was at greater risk than ever of experiencing a devastating earthquake.
Seismologist Fariborz Nateghollahi cautioned that a magnitude 7.0 earthquake could result in up to six million casualties. He also criticized the government’s crisis management efforts, highlighting the lack of preparedness and inadequate training for such a disaster.
Tehran’s seismic vulnerability
Greater Tehran, now home to over 10 million people, sits in a seismically active region with three major fault lines and many smaller ones.
A study conducted in collaboration with the Japan Cooperation Agency (JICA) a few years ago found that these fault lines have the potential to trigger earthquakes of magnitude 7.0 or higher, potentially destroying up to half of the city's buildings.
Seismologists, including Nateghollahi, have repeatedly warned that based on historical seismic cycles, any of these fault lines could become active at any time soon.
A 2018 IIEES study estimated a 40–70% probability of a major earthquake within a 100-kilometer radius of central Tehran in the next two to 12 years.
The last major earthquake in what is now Greater Tehran occurred in 1830, with a magnitude of 7.1, striking Shemiran—a small village at the time. Over the past few decades, Shemiran has transformed into one of the capital’s most affluent districts, now filled with high-rises, government buildings, and shopping malls.
High-risk areas
The southeastern part of Tehran, also situated on a major fault line, is considered the city’s most vulnerable area. It is characterized by densely packed old buildings and narrow streets, which would severely hinder rescue operations in the event of a major earthquake.
Additionally, the region has suffered from land subsidence due to a drastic decline in underground water levels over the past few decades.
A capital under strain
Authorities say the 47 percent drop in rainfall in Tehran province, the worst in the past 57 years, has seriously depleted the water reserves of several dams that supply the city’s drinking water. Images published in recent weeks showed that Karaj dam, one of the largest, had almost completely dried up. The dams also contributed to electricity generation to feed the capital, which has been experiencing regular power cuts in the past few months.
Iranian authorities, including President Masoud Pezeshkian, have on various occasions spoken of the need to relocate the country's capital due to its extreme vulnerability to major earthquakes.
In recent years, a shortage of water resources, land subsidence due to a decline in underground water levels, and air pollution have also become serious threats to the survival of the capital, established in 1786.
A history of devastation
Iran is one of the most seismically active countries in the world, with approximately 575 identified fault lines. Earthquakes of varying intensity are common, often resulting in significant casualties and destruction.
In 1990, a 7.4 magnitude earthquake struck Manjil and Roudbar in the Caspian mountains, killing between 35,000 and 50,000 people. Thirteen years later, a 6.6 magnitude earthquake devastated the southeastern city of Bam, claiming at least 34,000 lives.
Tehran's earthquake threat adds to city's woes | Iran International
Iran’s oil minister, Mohsen Paknejad, has denied that new sanctions and enforcement efforts by the Trump administration against Iran’s energy exports have had a significant impact.
“Right now, we are still exporting oil. There has been no disruption in our shipment routes,” Paknejad told Iranian state media.
Asked about Washington’s efforts to bring Iran’s oil exports to zero, Paknejad said such statements remain unproven. “All of this is being said for now. What is happening in practice is that we are exporting,” he said.
Asked if Iran is ready to deal with tougher sanctions enforcement by the US, Paknejad said, “Naturally, if any restrictions are imposed on Iran's oil sales, we have taken the necessary measures to respond.”
Paknejad also denied any decline in oil sales, saying Iran set a record for crude exports in the Iranian month of Dey (Dec21–Jan. 20).
Earlier this month, the US Treasury imposed sanctions on Paknejad, breaking with its usual practice of sparing senior political officials. The move was part of a broader effort to tighten enforcement on Iranian oil exports, which Washington says help fund Tehran’s military and security forces, including the Islamic Revolutionary Guard Corps (IRGC).
Paknejad’s comments on Saturday also follow a report earlier this week from Iraq’s Oil Minister Hayan Abdel-Ghani, who said that Iranian tankers intercepted by US forces in the Gulf were found to be using forged Iraqi documents.
"We received verbal inquiries about oil tankers detained by US naval forces. It turned out these tankers were Iranian and were using fake Iraqi manifests," Abdel-Ghani said on Iraqi state TV.
Iran denied the claim, saying its oil exports are conducted “within accepted trade frameworks,” and reaffirmed its position in a call between Paknejad and his Iraqi counterpart on Friday.
The dispute comes amid a broader US effort to crack down on alleged fuel smuggling and sanctions evasion by Iranian-linked networks. In December, Reuters reported that a smuggling network using forged documents was generating at least $1 billion annually for Iran and its allies in Iraq.
Ordinary Iranians are bearing unprecedented economic pain as their Islamic government's row with its hated enemies Israel and the United States ramps up and Tehran prioritizes military spending to shore up defense and its regional clout.
“It is a real tragedy,” said Mohamad Machine Chian, a senior researcher at the Center of Governance and Markets at Pittsburgh University on the Eye for Iran podcast. “Their quality of life has been steadily dropping for the past couple of years. But especially the past year, it has been a disaster.”
Chian told Eye for Iran that the Iranian government has continued to prioritize funding the Islamic Revolutionary Guard Corps (IRGC) and military ventures over investing in the wellbeing of its citizens.
Since President Masoud Pezeshkian took office, the Iranian currency has halved in value.
With unemployment surging above 70 percent, millions are struggling to afford basic necessities as crippling inflation and poverty grip the nation.
The sharp depreciation has driven inflation above 40 percent, with food prices soaring by as much as 100 percent in some cases. As the crisis deepens, the economic strain on ordinary Iranians is only expected to worsen in the coming months.
Machine Chian said President Pezeshkian missed numerous opportunities to address the deepening crisis and has failed to include a welfare plan in the budget to alleviate citizens' suffering.
“One such opportunity was that President Pezeshkian could have put together next year's budget in a way that convinced the Islamic Republic’s powers to at least, for a year, halt increases in military spending. That could have deescalated the situation,” said Machine Chian.
"This is during a crisis. He (Pezeshkian) should have prioritized the budget for basic necessities. But he prioritized the IRGC," said Machine Chian.
Iran implemented a 200 percent increase in military spending for the Persian year beginning this month and will aim to boost revenue through higher taxes despite a big deficit and a moribund currency besetting the economy.
It's bad...but just how bad?
The economic crisis is the worst Iran has experienced since the inception of the Islamic Republic, according to Mahdi Ghodsi, an economist at the Vienna Institute for International Economic Studies. Remarkably, Ghodsi says that the economy was better even during the eight-year war between Iran and Iraq.
“It's the worst situation, it's the worst condition, the direst condition that Iran has ever experienced,” said Ghodsi.
Ghodsi added that the reasons for this collapse are multifaceted, including Iran's militant stance in the region as a means of preserving the ruling system.
“It’s a dark comedy,” Ghodsi told Eye for Iran. “Leaders of Iran are mingling in a situation of lack of policy because their only objective is to survive. And to survive, they feel the need to initiate wars and increase tensions with other countries.”
Oil revenue: how much does it matter?
The looming uncertainty over a potential war with the United States or a new nuclear deal is also deepening the economic crisis.
Since President Trump took office, the rial has plummeted by 80,000. The administration has imposed new sanctions targeting Iran’s oil industry, including Chinese “teapot refineries” processing Iranian crude.
The Iranian state relies heavily on oil exports. However, at the current rate of oil exports, the revenue generated is insufficient to cover even basic pension funds, according to Machine Chian.
Iran's oil exports totaled $54 billion in 2024, up slightly from $53 billion in 2023, with volumes averaging 1.5 million barrels per day, according to the US Energy Information Administration.
However, President Trump signed an executive order vowing to reduce Iran’s oil exports to zero. Both Ghodsi and Machine Chian say that while the world markets can endure such a move, the impact on Iran’s economy would be crushing.
Iran currently attempts to stabilize the prices of basic goods and services by injecting US dollars into the economy. But if oil exports fall to zero, the state will lack sufficient foreign currency reserves, leading to further spikes in inflation and continued depreciation of the rial.
This also means Iran would no longer be able to subsidize the price of gasoline.
If the government can't subsidize gasoline prices, then there will likely be an increase in prices this summer, both economists warn.
Ghodsi and Machine Chian said that could lead to nationwide protests similar to the November 2019 protests, which erupted after a sudden increase in fuel prices and quickly spread as a broader expression to fight the establishment. Hundreds were killed and more than 7,000 were arrested.
But according to both economists, any meaningful change in Iran’s leadership through maximum pressure cannot happen without maximum support for the Iranian people.
With the shadow of war looming or a potential nuclear deal, the rial may continue to spiral. Rising inflation and economic hardship will likely fuel further public discontent, while tensions keep diplomatic and military risks high.
A senior adviser to Iran’s Supreme Leader urges the government to cede more economic control to the people, arguing that this is necessary to address sanctions, soaring inflation, and a rapidly depreciating currency.
By some estimates, 80% of Iran’s economy is controlled directly and indirectly by the state or affiliated religious foundations operating under Ali Khamenei’s orders.
Ali Larijani, a senior adviser to Khamenei, told the Eco Iran website that “what Iran’s economy needs is security, and that does not mean control by security institutions,” a clear jab at the influence of the IRGC and other forces.
Criticizing the involvement of security organizations in the economy, Larijani, a former parliamentary speaker, said Iran’s economy should be controlled by the people rather than the government. He also called for administrative reforms, global engagement, and resolving Iran’s nuclear issue through dialogue.
Larijani emphasized that "the government controls some 85 percent of Iran's industries and mines," but argued that it lacks the efficiency to manage these sectors effectively.
He also stressed the need for the government to ensure security for the private sector by passing relevant laws and persuading the Supreme Leader to support the move.
Speaking on Iran's foreign policy and negotiations with the United States, Larijani stated, "If the Americans had acted wisely, they could have changed the course of Washington's relationship with Tehran." He argued that US sanctions have hindered Iran’s economic development, emphasizing that economic prosperity is unattainable under such restrictions.
Washington imposed oil export and international banking sanctions on Iran after President Donald Trump withdrew from the JCPOA nuclear deal in 2018. Iran’s already struggling economy, burdened by inefficiencies, immediately sank into a prolonged recession, while its currency depreciated 25-fold.
Regarding the future of nuclear negotiations, Larijani stated, "Everything depends on US behavior. There is a gap between what the United States declares and what it actually does." He also emphasized that Iran should pursue its national interests in both the East and the West.
Meanwhile, in an interview with a Tehran-based website, Iranian economist Ali Ghanbari, addressing the current financial crisis, noted that some Iranian politicians appear to overlook the fundamental principle that every country must prioritize its own national interests.
Ghanbari stated, "Realistically speaking, it is unlikely that the country's economic situation—regarding inflation, poverty, and unemployment—will improve significantly compared to last year, as Iran's economy remains constrained by structural issues in foreign policy that are beyond the government's control."
The economist added, "We cannot expect any improvement in the country's economic situation as long as sanctions pressure continues." He noted that this is in addition to the broader issue of insufficient domestic and foreign investment in Iran.
Ghanbari stressed that the defining characteristic of Iran's economic policy is "confusion," a problem that has become even more evident following the impeachment and dismissal of the former Minister of Economy.
As a way forward, Ghanbari suggested that Iran should abandon the idea of indirect talks and engage in direct negotiations with the United States, arguing that intermediaries only complicate the process.
He also urged the government to prioritize its employees to safeguard its social capital. At the same time, he emphasized that if Iran is serious about easing tensions and sanctions in the coming year, it must carefully select its strategic partners, a veiled reference to Tehran’s preference for close ties with China and Russia.
While both Larijani and Ghanbari emphasized the need to address foreign policy challenges to resolve Iran’s economic woes, analyst Hamid Aboutalebi suggested that a new path for dialogue with the United States may have emerged. Writing on the conservative Nameh News website in Tehran, he pointed to recent conciliatory remarks by Trump’s Middle East adviser, Steve Witkoff, as a potential opening.
Aboutalebi further argued that the Iranian government should move away from propaganda campaigns against Washington and pursue direct negotiations to de-escalate tensions.
International sanctions are costing each Iranian citizen an estimated 530 million rials or about $500 annually in the non-oil trade sector alone, a former central bank governor has said.
Mohammad Hossein Adeli, the former head of the Central Bank of Iran under President Akbar Hashemi Rafsanjani, told the Khabar Online website that sanctions force Iranian traders to pay a premium of 10% to 20% above market prices for goods destined for Iran.
Economic hardships for Iranians have mounted as US-led sanctions and official mismanagement have sent costs of living soaring and the currency to historic lows.
The need to use covert routes to bypass sanctions necessitates multiple layers of documentation to conceal the final destination of goods, he added.
Establishing shell companies in third countries to aid in obscuring the destination further inflates the final price of imported goods.
Estimating the sanctions-evasion processes add almost a third to the original price of each product, Adeli referred to Iran's foreign trade volume of approximately $150 billion in the Iranian year 1402 (March 2023-March 2024).
"Thirty percent of this amount is $50 billion. This figure... is equivalent to the government's annual budget."
The figure totals 530 million rials per Iranian citizen annually, meaning a family of four effectively bears an additional monthly expense of 180 million rials (about $180) due to the sanctions' impact on non-oil trade.
While Iranian authorities estimate a family of three requires about $400 monthly for basic needs, the average worker earns approximately $120 per month.
Adeli's assessment focuses solely on the non-oil trade sector. Oil exports, which make up the bulk of government revenue, are also heavily sanctioned.
In a report late last year, Iran International estimated that sanctions-evasion tactics and the use of trustee companies cost Iran at least $13.5 billion in oil export revenue during the Iranian year 1403 (March 2024-March 2025).
In February, US President Donald Trump signed a directive to reinstate the so-called maximum pressure policy against Iran, aimed at bringing Iranian oil exports to zero. He emphasized that the Islamic Republic should no longer be able to sell oil to other countries.
The US Justice Department has filed a civil forfeiture complaint seeking to seize $47 million in proceeds from the sale of nearly one million barrels of Iranian oil, alleging the funds benefited the IRGC and its Qods Force, both designated as terrorist organizations.
The complaint, filed in the US District Court for the District of Columbia, outlines an alleged scheme between 2022 and 2024 to illicitly ship, store, and sell Iranian oil for the benefit of the Islamic Revolutionary Guard Corps (IRGC) and the IRGC-QF.
According to the Justice Department, facilitators used deceptive tactics to conceal the oil's Iranian origin, falsely labeling it as Malaysian.
The alleged scheme involved manipulating the tanker's Automatic Identification System (AIS) to conceal that the oil was loaded from an Iranian port.
Additionally, the facilitators are accused of presenting falsified documents to a storage and port facility in Croatia, claiming the oil was of Malaysian origin.
Storage fees in Croatia were reportedly paid in US dollars through US financial institutions, transactions that authorities believe would have been rejected had the institutions been aware of the oil's Iranian connection.
The petroleum product was ultimately sold in 2024, leading to the seizure of the $47 million in proceeds that are now subject to the forfeiture complaint.
The Justice Department further contends that the petroleum is the property of the National Iranian Oil Company (NIOC), which it accuses of perpetuating a federal crime of terrorism by providing material support to the IRGC and IRGC-QF.
The complaint alleges that profits generated from such sales support the IRGC's "full range of malign activities," including the proliferation of weapons of mass destruction and their delivery systems, support for terrorism, and human rights abuses both within Iran and internationally.
The Justice Department noted that funds successfully forfeited that are linked to a state sponsor of terrorism may be directed, in whole or in part, to the US Victims of State Sponsored Terrorism Fund.
The case is being investigated by the FBI's Minneapolis Field Office and Homeland Security Investigations in New York, with Assistant US Attorneys and a Trial Attorney from the National Security Division handling the litigation.
The Justice Department emphasized that a civil forfeiture complaint is merely an allegation, and the government bears the burden of proving forfeitability in the civil forfeiture proceeding.
In February, US President Donald Trump's signed a directive restoring the so-called maximum pressure policy on Iran of his first term aimed at driving the Islamic Republic's oil exports to zero.
Oil is critical for Iran's economy, accounting for around 15% of Iran's GDP and at least half of the government's budget, employing around a third of the country's 25 million workers.
Under the Biden administration, Iran's oil revenues surged due to weak sanctions enforcement. Trump has vowed to reverse it and bring the oil exports to zero, if Iran refuses to curtail its nuclear program.