Iran’s parliamentary speaker warns of deepening energy crisis
Iran’s parliament speaker has candidly warned of escalating energy shortages and called for immediate action to avert a worsening crisis as winter approaches.
Iran’s parliament speaker has candidly warned of escalating energy shortages and called for immediate action to avert a worsening crisis as winter approaches.
Mohammad Bagher Ghalibaf’s remarks came during a review of the Energy Commission's report on seasonal power outages and fuel shortages for Iran's thermal power plants on Tuesday.
"Energy is one of the country’s significant opportunities but look at the current situation. This summer, we faced over 15,000 megawatts of consumption imbalance," Ghalibaf said, highlighting industrial production losses of 1.5% during the same period, according to the Parliament’s Research Center.
"This is detrimental to both producers and the government, as the government cannot collect taxes from their profits."
Iran’s natural gas production has slowed significantly, with a production growth rate in the past three years reaching just a third of the previous decade’s pace. Much of this slowdown stems from the aging South Pars gas field, which accounts for 75% of the country’s output but is experiencing natural declines. International sanctions have compounded the issue, preventing the acquisition of advanced production platforms.
During the winter of 2023, Ghalibaf noted, the country faced a 250-million-cubic-meter daily deficit in the gas sector, even with industry shutdowns and pressure drops.
This shortage has resulted in widespread power outages and industrial declines. Iran’s steel production, for instance, fell by 45% in the summer, while the petrochemical sector, heavily reliant on natural gas, has been operating at only 70% capacity.
Ghalibaf attributed part of the crisis to inefficiencies within the ministries of oil and energy, saying that their lack of coordination has exacerbated the problem.
“There is a conflict of interest between these two ministries. Both have grown so large that their coordination is no longer manageable by senior officials,” he said. He urged the government and parliament to collaborate with experts to resolve these institutional issues and address organized fuel smuggling, which siphons off 25 to 30 million liters of refined products daily.
The energy shortages have had dire consequences for Iranian citizens. Widespread blackouts in residential areas have disrupted daily life, sparked public anger, and curtailed commercial activity. With 70% of the country’s energy consumption dependent on natural gas, no viable alternative exists to bridge the gap. Planned gas price increases, while potentially boosting revenue, are unlikely to significantly curb consumption given the low domestic gas prices.
Ghalibaf also touched on the international repercussions of Iran’s energy crisis. “There was a time when we could use oil as leverage against enemy threats,” he added, lamenting the loss of this strategic tool due to declining production and logistical issues.
With inflation exceeding 40% for five years, a halved national currency, and over 30 million citizens below the poverty line, the energy crisis adds yet another layer of strain to Iran’s already fragile economy.
Cement plants near metropolitan areas, barred from using mazut due to pollution concerns, have slashed production by 50%, while those in remote regions are navigating logistical hurdles to secure alternative fuels.
The disruptions come against the backdrop of a worsening energy deficit that has deeply impacted multiple industries.
Ali Akbar Alvandian, Secretary of the Cement Industry Employers' Association, highlighted the strain during a recent interview with ILNA news agency.
"Gas supplies to cement factories are limited, forcing some plants far from cities to use mazut. Those near urban centers, unable to utilize mazut, have had to halve their production," he explained.
Despite the setbacks, Alvandian claimed that the market remains stable, with October’s production levels surpassing those of the same period last year. Producers, he said, are striving to ensure consistent supply despite the energy challenges.
Iran's energy deficit is not new, but its scale has become more pronounced. The country’s natural gas production growth has slowed significantly, particularly from its South Pars gas field, which accounts for 75% of output and is now in decline. Sanctions have prevented Iran from attracting the foreign investment and technology needed to offset this decline. Furthermore, inefficiencies in production and distribution contribute to an annual loss of 28 billion cubic meters of gas—equivalent to one-tenth of the nation’s annual production.
The result has been a chronic shortage of power, with blackouts impacting residential, commercial, and industrial sectors. Summer months saw electricity rationing that halted operations at 70% of cement kilns, causing supply chain disruptions.
As winter approaches, the focus has shifted to natural gas, with cuts already affecting the steel and petrochemical sectors. This has compounded existing challenges for industries reliant on consistent energy supplies.
For factories located far from urban centers, mazut has become a critical alternative to natural gas. Yet, even this stopgap measure is fraught with difficulties. According to Alvandian, plants are required to source mazut from ports on the Persian Gulf, incurring steep transportation costs exacerbated by a shortage of tanker fleets.
"If these challenges persist, production could be halted entirely," he warned.
The cement industry’s struggles mirror the broader economic pressures facing Iran. Inflation has remained above 40% for five years, while the national currency has lost half its value in just two years. With at least 30 million citizens living below the poverty line, energy disruptions further strain an already fragile economy. Industrial sectors, including steel and petrochemicals—key contributors to non-oil exports—have faced severe production losses due to energy shortages.
Cement exports have also declined, with clinker exports dropping by 17% in the first seven months of the Iranian year (starting in mid-March) compared to the same period last year. Domestic markets are now being prioritized, but reduced production levels could still lead to local shortages.
The government faces difficult choices as winter intensifies. Domestic gas consumption is expected to surge to 650 million cubic meters per day, exacerbating an existing deficit of 90 million cubic meters. Planned price increases for gas might bolster state revenues but are unlikely to curb household consumption significantly due to low base rates. Meanwhile, industrial users remain at the mercy of unpredictable energy supplies, jeopardizing output and employment.
Alvandian suggested shared power outages between households and industries as a potential stopgap, though he cautioned against extending such measures into winter.
"Further electricity disruptions would affect not only industries but also residential areas, leading to broader economic and social challenges," he added.
Iran’s energy crisis, rooted in years of underinvestment, inefficiencies, and sanctions, presents a formidable barrier to economic recovery. The cement industry’s struggles are emblematic of the larger pressures facing the country.
The Israeli military posted to X that a series of airstrikes over an unspecified time period attacked the route Iran has been using to supply Hezbollah’s elite unit 4400 with weapons with the oversight of Syria's Military Security.
The route is allegedly used for storing weapons in Syrian military warehouses prior to their transfer to Lebanon.
The Syrian Military Security Unit plays a key role in supplying weapons to Iran's proxies in the region, the Israel Defense Forces (IDF) said, adding that the strikes come as part of efforts against Hezbollah’s Unit 4400, which is the body responsible for transporting weapons from Iran and other regional allies to Hezbollah in Lebanon.
It was headed by Muhammad Ja’far Qasir, who was wanted by the US State Department before Israel assassinated him on October 1, 2024.
“The IDF remains committed to countering Iran’s efforts to arm its terrorist proxies across the region,” the tweet read.
They posted an animated video to the tweet that shows the alleged Iranian smuggling route that starts in Iran, makes its way into Iraq and through Syria into Lebanon.
The Israeli military said in its statement that the Iranian smuggling routes are not a new target but part of a long-term effort to disrupt the flow of weapons to Iran's armed allies which have been confronting the Jewish state for over a year.
Syria’s state news agency SANA said the Israeli strikes on Monday damaged bridges in the al-Qusayr area.
According to the Syrian Observatory for Human Rights, two people were killed and five injured in that attack.