Iranians complain of blackouts, water cuts as power crisis deepens

“Some have tried to prove that corruption in the Islamic Republic is systemic. That is a lie,” Khamenei said. “Corruption is like a seven-headed dragon that won’t vanish easily, but the system itself is healthy.”

Addressing provincial governors in Tehran, he called on people in power to avoid conflicts of interest and personal business ventures, saying corrupt officials face double divine punishment.

His remarks follow a withering speech by US President Donald Trump in Riyadh this month in which he accused Iran’s leadership of theft and mismanagement.

"Iran's leaders have focused on stealing their people's wealth to fund terror and bloodshed abroad. Most tragic of all, they have dragged down an entire region with them," Trump said.

The latest Corruption Perceptions Index from watchdog Transparency International ranks Iran 151 out of 180 countries in terms of public sector corruption.

Iranian President Masoud Pezeshkian responded to Trump last week in a speech to parliament, accusing the US of hypocrisy and exploitation.

“The master thieves of the planet who rob every country now accuse others,” he said. “They came here to plunder.”

The Supreme Leader's remarks come as nearly daily protests linger across Iran.

Union members from the trucking, baking and other sectors are coordinating in ongoing nationwide strikes while pensioners have held scattered demonstrations over unpaid benefits in recent days.

Almost a third of Iranians struggle to afford basic necessities and millions live below the poverty line amid sharply rising inflation and stagnant wages.

A stream of voice messages and videos sent in from across the country to Iran International's submissions line points to a population grappling with collapsing purchasing power and authorities they see as out of touch with their plight.

The average monthly salary in Iran is around 150 to 200 million rials—equivalent to approximately $200-$250. But for residents in Tehran, especially those with families, this amount barely covers essentials.

One video showed a family’s lunch—just potatoes, yogurt and bread—accompanied by a bitter message voiced by the person filming: “May God curse you."

“Two packed small cakes and two juices cost 1,000,000 rials ($1.2),” said one person by audio message. “How long must we live like this?”

From grocery items to medical care, costs have surged dramatically. A 10 kg bag of Pakistani rice now sells for 9,800,000 rials ($11.80), while apples and pears fetch up to 7,000,000 rials/kg ($8.43)

Others described medical burdens. A pensioner, aged 70, said his income was just 38,000,000 rials (around $45.8) a month. “Half of that goes to medication,” he said. In another message, a military veteran said he had to pay out of pocket for cold medicine. “At my age, this is shameful,” he added.

Multiple complaints targeted the government's National Housing Plan. One registrant said she borrowed 1,500,000,000 rials (around $1,800) for a housing deposit but never received the promised loan. “Why aren’t you giving people their loans, President Pezeshkian?” she asked.

Others addressed Iran’s leadership more broadly. “You say you’ll destroy America,” one voice said, “but people are paying 16,500,000 rials ($20) just to buy soy and beans.”

Another pointed to baby formula: two subsidized cans plus a painkiller cost over 3,400,000 rials ($4.10), with unsubsidized prices higher. “So what’s the point of subsidies?”

Several messages referenced US President Donald Trump’s recent remarks during his Middle East tour, calling Iranian leaders “thieves.” One man said, “If you’re not thieves, why are people bent over in garbage bins?”

The sharp rise in prices for basic goods such as the cheapest type of bread called lavash—up from 65,00 rials to 13,250 in under a year (~$0.008 to $0.016)—has left many Iranians how their static incomes can ever catch up to soaring costs. “Who gets a raise that often?” one asked.

The voices together point to a society under strain with many seeing no financial future in the status quo.

During a high-profile visit to Washington in May, KRG Prime Minister Masrour Barzani announced the deals with HKN Energy and WesternZagros, targeting development of the Miran and Topkhana-Kurdamir gas fields in the western part of the region near the Syrian border. Together, the projects are valued at $110 billion over their lifetime.

The US-KRG energy deals have sent a powerful message—both to Baghdad and to Tehran. If realized, they could shift Iraq’s energy independence and diminish Iran’s regional clout.

US Energy Secretary Chris Wright praised the deals at the Al-Monitor Global Institute in Washington on May 22, calling them “very aligned with President Trump’s agenda.”

He added, “We need Iraq and others off Iranian dependence.”

Secretary of State Marco Rubio met with Prime Minister Barzani in Washington on May 23. According to the State Department, the Secretary praised the energy agreements and reaffirmed US support for a strong and resilient Kurdistan Region within a sovereign and prosperous federal Iraq.

But analysts believe without a breakthrough in Baghdad-Erbil relations and tangible infrastructure investment, the deals remain aspirational—more of a political statement than a pipeline to regional transformation.

Iran’s gas grip at risk

Iran currently supplies around 25% of Iraq’s electricity needs through natural gas exports. Should the Kurdish projects proceed, that influence could be seriously eroded.

According to Iman Nasseri, Managing Director for the Middle East at FGE, Iran has little to gain financially from its gas exports to Iraq, and growing domestic shortages are shifting Tehran’s calculus.

He told Iran International, “They’re (Iraq) receiving gas for free because they have the excuse of not being able to pay due to US sanctions....Iran would welcome any scenario that could get Iraqis off the contract that they have signed with the Iranians [...] because they are short in natural gas at the moment."

Nasseri said that while the gas fields targeted by the US-KRG deals—estimated to hold 13 trillion cubic feet collectively—are indeed substantial, the main obstacles to their development have always been political and economic, not technical.

Strategic implications for Iran

Meanwhile, Baghdad swiftly denounced the agreements. Iraq’s Oil Ministry declared them “null and void." A senior Iraqi official told Reuters the central government had not been informed in advance.

KRG’s Ministry of Natural Resources defended the move, citing existing legal frameworks and long-standing contracts validated by Iraqi courts.

Energy analyst Dalga Khatinoglu told Iran International that the gas reserves in Iraqi Kurdistan—estimated at over 211.9 trillion cubic feet —are large enough to position the region as a major exporter to Turkey and Europe.

While Iran holds five times more gas, he warned, Tehran risks losing its most critical energy customers if the Kurdish fields come online.

“Iran earns $5 billion a year from gas exports to Iraq and Turkey,” Khatinoglu said, underscoring the threat to both revenue and regional influence. If Kurdish gas starts reaching Turkey and Europe, Iran not only loses market share—it loses geopolitical leverage.

US policy or political signal?

Ambassador John Craig, a former senior US diplomat, told Iran International the announcement may signal more of a “test” than a decisive turning point.

“The KRG is testing the water—to see how the Iranians react to it and how the US reacts to it,” he said, emphasizing that Iran “no longer has the punch” it once did following Israeli strikes that “took out all their munitions factories” and weakened Tehran’s regional leverage.

Craig is a former US ambassador to Oman under President Clinton and later served as director for the Middle East at the National Security Council under President George W. Bush.

He said that while the Kurdish leadership may see an opening to act more independently, the projects are far from being realized. “This is not going to happen in the next 10 months, no. It’s long term,” he said. “Exploration, production, development—it could take three to five years.”

Nasseri also described the deals as more symbolic than real, likening them to ‘wishful thinking’ without the conditions needed for execution. He emphasized that Kurdistan currently lacks a viable off-taker, adding, "you can’t develop gas without finding a place and an off-taker that can consume that gas.”

In regional markets, the wasted gas would be worth over $10 billion per year. It amounts to 40% of the gas used annually by Iranian households.

This massive loss stems from underinvestment in gas recovery infrastructure at oil fields and an aging transmission network.

Most recent data from the International Energy Agency (IEA) shows methane leaks from Iran’s oil and gas facilities exceeded 8 billion cubic meters in 2023.

Iran also flares over 20 billion cubic meters annually due to the lack of gas-capturing systems at oil production sites, according to the World Bank estimates.

Leaks and flaring

Iran ranks fourth globally in methane emissions from fossil fuel operations. Despite this, Iran has made little progress in cutting emissions.

IEA data shows most methane leaks originate from production facilities, with the rest linked to transmission infrastructure.

When it comes to gas flaring, Iran ranks second worldwide. For two decades, the government has done virtually nothing to capture associated gas—the byproduct of oil extraction—opting instead to burn it off at the wellhead.

This alone releases 38 million tons of greenhouse gases annually, nearly matching the total yearly emissions of Sweden or Norway.

Iran’s Oil Ministry estimates it would cost $5 billion to capture the flared gas. Yet investment in oil and gas fields has fallen sixfold in two decades and now stands at just $3 billion, according to the parliament’s Research Center.

As a result, flaring continues unabated, and gas production growth has slowed to a third of its pace a decade ago. Iran now faces gas shortages in all seasons.

Authorities often blame consumers for excessive use, overlooking the fact that losses during production and transmission account for 40% of the gas consumed by households.

Turning to imports

With domestic solutions stalled, Iran has increasingly looked abroad to cover its shortfall. But solving the crisis will take more than money—it also requires advanced technology and cooperation with international energy firms.

Recent efforts have focused on non-binding memoranda of understanding with Russian companies, none of which have led to concrete outcomes. Ironically, Russia itself suffers from even greater gas losses and lacks the technological capability to fix the problem at home or in Iran.

Iran has also tried to import gas from Turkmenistan and Russia. Turkmenistan, however, halted exports years ago over debt dispute. Russia recently agreed to supply small volumes via Azerbaijan, but pipeline capacity on that route is a fraction of peak deficit in winter.

Despite these shortages, Iran continues to export gas to Turkey and Iraq, often at the expense of domestic industries and power plants.

The reason? Price disparities. Exporting just 7% of its gas earns more revenue than selling the remaining 93% at heavily subsidized domestic rates, offering critical budgetary relief.

In its current budget, Iran projects gas exports of 16 billion cubic meters worth $5 billion—a 14% increase over last year.

But the future is uncertain. The 25-year gas deal with Turkey expires in 2026, and Iraq has announced plans to phase out Iranian gas imports within three years.

Without urgent investment, technological cooperation, and sweeping infrastructure reforms, Iran’s energy sector risks permanent decline—trapped in a cycle of waste, environmental damage, and economic self-sabotage.

Among the additives is methyl tert-butyl ether (MTBE), a chemical known for its role in groundwater contamination and listed as a potential carcinogen.

Though banned or heavily restricted in numerous countries such as the US, MTBE is reportedly being used in substantial volumes—even in gasoline marketed under European emissions standards, such as Euro 4 and Euro 5.

Unacknowledged chemicals in ‘euro-standard’ fuel

The documents reviewed by IOD detail a system-wide reliance on off-site chemical additives to raise the octane rating of base gasoline. These include MTBE and aromatic octane boosters, which are not derived from conventional refining processes.

Iran’s Shazand refinery, the country’s largest producer of Euro-grade gasoline, blends approximately 350,000 liters of MTBE daily, while the Esfahan refinery adds 325,000 liters per day, according to the data. Both refineries label their fuel as Euro 4 or Euro 5 compliant.

The use of restricted additives contradicts environmental standards associated with the Euro classification, which are designed to reduce emissions and limit pollutants.

Production gap and fuel demand

Iran produced an average of 101 million liters of base gasoline per day in 2024, rising to 121 million liters per day after incorporating roughly 20 million liters of off-site additives. However, daily domestic demand stands at 123.5 million liters, leaving a shortfall of 2.5 million liters.

The shortfall, coupled with economic constraints and sanctions limiting imports and refinery upgrades, has prompted a quiet return to petrochemical-derived gasoline—first adopted during international sanctions in 2010.

Refining limitations and aging infrastructure

In spite of owning the world's second largest natural gas reserves, Iran’s refining infrastructure remains massively underdeveloped resulting from both sanctions and macroeconomic policies in Iran. No new refinery has been commissioned since 2017, and six of the ten major facilities predate the 1979 Islamic Revolution.

The Persian Gulf Star refinery, Iran’s largest by volume, produces 39 million liters/day, but none of its output qualifies for Euro-grade certification.

According to IOD, one-third of Iran’s gasoline is officially labeled Euro 4 or Euro 5, but internal documents indicate that even these fuels often contain high-risk chemical additives.

Health and environmental risks

MTBE is widely banned in Europe, the US, and other countries due to its high solubility in water and persistence in the environment. Even trace contamination of groundwater can lead to environmental damage and health risks for the population, making its use in consumer fuels controversial.

In 2014, a Tehran city health official warned that non-standard fuels could increase airborne benzene levels up to 35 times the safe limit.

A 2023 environmental review by Iranian authorities said that just 38% of gasoline met domestic quality standards. The IOD report suggests the problem has since worsened.

Iran maintains one of the world’s lowest gasoline prices—second only to Libya—due to heavy state subsidies, currency depreciation, and the impact of international sanctions.

Officials frequently cite low fuel prices as a driver of excessive consumption and cross-border smuggling, but attempts to increase prices have been shelved amid fears of social unrest.

The government has not publicly addressed the use of MTBE or other additives, and internal reports avoid naming specific chemicals, instead using general terms such as “aromatic octane boosters” or “off-site petrochemical inputs.”

Iran Open Data warns that Iran’s increasing dependence on petrochemical additives, without parallel investment in refining capacity, poses significant long-term risks to public health, environmental safety, and economic sustainability.

“The growing reliance on high-risk additives has become a cornerstone of fuel supply, in the absence of refinery upgrades,” the report said. “This strategy could carry severe health, environmental, and economic consequences.”

Officials from Iran’s Ministry of Petroleum and the Department of Environment did not immediately respond to requests for comment.