A massive energy crisis has erupted in Iran, leading to the closure of businesses and government institutions. Schools have been switched to distance learning, and cities have been left without electricity.
Points of attention
- A serious energy crisis has erupted in Iran, leading to the closure of businesses and changes in the operation of institutions and schools.
- The main causes of the crisis are long-standing sanctions, outdated infrastructure, and excessive energy consumption.
- Economic losses in Iran have already been estimated at “tens of billions of dollars,” and the Iranian rial is rapidly falling.
- The government chose to reduce gas supplies to power plants to avoid social tension, which led to discontent among the population.
- The Iranian Central Bank is trying to stabilize the national currency exchange rate, but market fluctuations have only exacerbated the situation.
What is the situation in Iran?
As the publication notes, government institutions are either closed or operating on a reduced schedule. Educational institutions have switched to online mode.
Shopping malls, highways, and industrial enterprises were left without power, leading to a significant reduction in production.
Despite its significant reserves of natural gas and oil, Iran has faced serious energy problems. As the NYT notes, the main causes of the crisis are years of sanctions, outdated infrastructure, inefficient management, excessive energy consumption, and possible targeted attacks by Israel.
The country has been effectively in power-saving mode for the past week, sparking public discontent. Economic losses are already estimated at "tens of billions of dollars."
Iranian President Masoud Pezeshkian said the situation with the energy infrastructure has reached a critical point. According to official data, the country has a natural gas deficit of about 350 million cubic meters per day, and the cold snap has significantly increased demand for the fuel.
The authorities faced a difficult dilemma: reduce gas supplies to the population or limit its supply to power plants. The government chose the second option to avoid social tension.
By December 20, 17 power plants in Iran had completely stopped operating, while the rest were only partially operating.
What is known about the record collapse of the Iranian currency
In particular, in 2015, after the signing of the nuclear deal, the value of the Iranian rial was 32 thousand per dollar.
However, on the day of the inauguration of the new President Masoud Pezeshkian, July 30, 2024, the rate was 584 thousand to the dollar. On the day of Donald Trump's victory in the US elections, the rate was 703 thousand to the dollar.
Currently, the Iranian Central Bank is trying to stabilize the exchange rate of the national currency by injecting $220 million into the market. However, these measures only resulted in the exchange rate being 767 thousand as of Thursday morning, December 19.
