Iran officially rolls out higher gas price under new three-tier system

Capital residents shared moments of joy as they beheld the showers and expressed hope that the traditional rainy season could provide relief from a crisis that Iran's president has warned may doom the city.

“Even the rain could not defeat the heavy air pollution of Tehran, but for a short amount of time, the beauty of the northern mountains are visible,” a user posted on X.

"I know not everyone is feeling well; but I hope that wherever you are, this short rain has at least warmed our hearts for a moment with the beauty of nature," posted another user.

Iran is in its sixth consecutive year of drought, with reservoirs at historic lows. Tehran's Latyan Dam is at its lowest in six decades, Karaj (Amir Kabir) holds under 10% capacity, and Mashhad's dams are below 3%.

Nationwide, 19-22 major dams are under 15-20% capacity, while groundwater extraction exceeds recharge, causing land subsidence in Tehran and other areas.

The prolonged dry period has pushed reservoir levels across Iran to historic lows. The country’s Karkheh Dam hydroelectric plant was forced to halt power generation last week due to the shrinking water level in its reservoir.

Officials said the dam’s basin has endured years of drought, with water now flowing only through lower outlets to meet downstream needs.

Water specialists quoted by local media say that if current patterns continue, significant parts of Tehran could face severe supply instability within the next decade.

The crisis is mainly due to decades of mismanagement. Agriculture uses 80 to 90 percent of the country's water but with less than 40 percent efficiency.

Too many dams have been built, leaky pipes waste 15 to 30 percent of supply, wastewater recycling stands at only about 20 percent compared to 85 to 98 percent in neighboring countries, and conservation efforts remain weak.

President Masoud Pezeshkian warned in November that without substantial rain, Tehran faces what he called "Day Zero", necessitating water rationing or even partial evacuation of the capital. Nightly pressure cuts, heavy consumer penalties, and unannounced outages are already common; some cities have already begun rationing.

Recent rain offers hope but is insufficient to refill reservoirs or reverse depletion. Iran risks ongoing shortages in drinking water, farming, hydropower and potential unrest, with calls for structural reforms over water management and agriculture growing.

Staff from the State Welfare Organization said their salaries do not meet living costs despite long years of experience. Some told ILNA news agency that wide pay gaps between provincial workers and central office staff have fueled anger. Protesters voiced frustration over rising expenses and what they described as stalled government promises.

Oil, gas and power-sector contract workers joined the protest, urging lawmakers to remove intermediary contractors and implement legislation intended to shift temporary workers into permanent roles. They said the lack of progress has left many without stable income or benefits.

The protests come as Iran faces rising inflation and a sharp fall in its currency. This week, the rial slid to a new record low, with the US dollar trading at about 1.26 million rials, while gold prices also hit record levels.

Finance Minister Ali Madanizadeh has said the currency slide reflects the impact of a brief war with Israel earlier this year, while economists point to long-standing economic problems and renewed UN sanctions as key drivers of inflation.

Wednesday’s rally followed one of the largest labor actions in years at the South Pars gas hub in Asaluyeh, where at least 5,000 contract workers stopped work on Tuesday over wages and job security.

Labor unrest has increased across Iran as rising prices and currency volatility strain households, with rights groups reporting thousands of labor protests and strikes across the country over the past year.

“Tehran and Minsk have complementary economies and can meet each other’s needs,” Aref said, stressing that political goodwill between the two nations provides “a strong basis for broadening ties in trade, industry, and technology.”

The two-day meeting, co-chaired by Iran’s Industry Minister Mohammad Atabak and Belarusian Industry Minister Andrei Kuznetsov, brought together senior officials, business representatives, and experts from both countries to outline a new phase of economic, scientific, and industrial cooperation.

Atabak announced that Tehran and Minsk had agreed to establish joint industrial plants in Sistan-Baluchestan Province in southeastern Iran, focusing on the production of heavy machinery, agricultural equipment, and mining technology as part of efforts to expand bilateral industrial cooperation. He called the initiative “a turning point” in bilateral industrial relations and part of efforts to implement the Iran–Eurasian Economic Union (EAEU) free trade agreement.

Atabak added that the two governments aim to remove banking and customs obstacles, enhance trade facilitation, and allow Belarusian firms to use Iran’s southern ports as gateways to markets in India, Africa, and Southeast Asia.

Officials also discussed joint ventures in pharmaceuticals, medical technology, and higher education, including university partnerships and mutual recognition of degrees. Aref said these initiatives could “turn scientific and technological cooperation into one of the pillars” of Iran–Belarus relations.

Market data also showed that the benchmark Emami gold coin was trading at its own record of 1.32 billion rials, up more than 2.5 percent from the start of the week. The dollar had gained roughly the same amount over that period.

The British pound crossed 1.6 million rials and the euro rose beyond 1.45 million rials, capping a volatile two-day rally.

The latest surge prompted unusually sharp criticism from media outlets affiliated with Iran’s Revolutionary Guard. The Fars and Tasnim news agencies, which typically avoid acknowledging free-market exchange rates, openly attacked the relatively moderate administration of President Masoud Pezeshkian for the sharp rise.

But Finance Minister Ali Madanizadeh sought to justify the inflationary shock during a Student Day speech at Sharif University.

“Do you expect the dollar to fall when the country has just come under an unprecedented military attack and suffered several hundred trillion tomans in damage?” he asked, referring to the 12-day conflict with Israel.

He compared the government’s situation to that of “a doctor operating in a field hospital under bombardment."

Inflation and foreign-exchange volatility have intensified since the return of UN sanctions in September and Tehran’s insistence on maintaining its nuclear enrichment program in defiance of the international community's demands.

Over the past year, food prices have risen more than 66 percent on average, squeezing households and straining purchasing power.

Root causes of malaise

Iranian state media have blamed a recent cabinet decision allowing imports of essential goods using foreign currency reserves not provided by the Central Bank. Outlets have argued that the move has pushed importers into the open market and fueled demand for hard currency.

Fars News said the measure “disrupted the market,” while Tasnim described it as a “strategic mistake” that sent the wrong signal to traders and amplified inflation expectations.

Economists point instead to long-standing structural drivers—especially rapid money-supply growth—combined with heightened political uncertainty.

Arash Hasannia, an economic journalist, told Iran International that the pressures have driven precautionary investment toward gold and foreign currency.

He noted that, unlike in previous years, the government and the Central Bank have refrained from intervening to stabilize the rial.

“It appears the Central Bank lacks the capacity to enter the market,” he said, adding that the bank seems reluctant or unable to inject scarce reserves to slow the currency’s decline.

Suspicions by critics that the government deliberately allows the exchange rate to rise to cover budget shortfalls have resurfaced again this fall, but Hasannia stressed that no evidence substantiates the claims.

Iranian media on Monday described the charges against Esmail Kahrom as relating to making “false statements” and actions “against national security.”

Prosecutors also opened a case against the editor-in-chief of the Jamaran news site, which published Kahrom’s interview.

In the November 30 conversation, Kahrom said that each missile costs roughly two million dollars and argued that if public health mattered to officials, they could redirect the equivalent of 10 missiles to upgrade fuel standards. He said authorities refused because “their priorities lie elsewhere.”

Iran, one of the largest oil and gas producers in the world, is facing a severe natural gas shortage. That shortage has prompted refineries to bulk out the fuel's volume with other substances, like mazut which environmentalists believe has played a major role in Iran's worsening air pollution.

Kahrom warned that the mazut used in Iran contains sulfur levels “seven times the global standard,” and that domestic fuel quality is also inadequate. His comments triggered sharp pushback from state-affiliated outlets.

Mazut, the non-standard gasoline contains harmful additives and has significantly contributed to the air pollution crisis in the country.

The use of the low-grade fuel mazut by power plants in Iran has been linked to severe harm to public health and even fatalities, with Iranians frequently expressing frustration over the worsening air quality and pollution in many cities.

State media dismiss environmental concerns

Young Journalists Club, tied to state broadcaster IRIB, wrote that “certain groups believe defense budgets should be spent on the environment,” calling national security a nonnegotiable necessity and portraying environmental debates as a distraction.

Farhikhtegan, a newspaper affiliated with the state-run Islamic Azad University, similarly argued – referencing the 12-day war with Israel – that critics forget “without deterrence, the cost of war would far outweigh any air pollution.”

Environmental warnings have frequently been downplayed or mocked by officials and pro-government media. Past concerns over water scarcity, energy crises, deforestation and land subsidence have met similar resistance.

A prominent example was the campaign against hydrologist Kaveh Madani, who faced accusations of espionage after warning of impending water collapse and ultimately left the country.

Iran has faced worsening air pollution in recent years alongside severe water and energy shortages, with experts tracing the crisis to aging infrastructure, poor fuel quality and policy inaction.