Iran faces a new energy imbalance, but its options are limited

Key points

• Tehran, Iran – Iran is facing more energy constraints as its summer season begins, with the widespread use of air conditioning and other needs during hotter months contributing to an imbalance between supply and consumption.
• For decades, successive Iranian governments have kept utility bills well below supply costs for households and offices through a mix of implicit oil-and-gas subsidies, administered tariffs, state-controlled pricing, and sometimes direct financial support.
• The negative impacts of the war with Israel and the United States on the economy mean the government has fewer tools at its disposal to deal with an energy crisis this summer.
• Despite having the world’s third-largest proven crude oil reserves, Iran will have to import fuel again as demand outpaces refinery output.
• President Masoud Pezeshkian has repeatedly urged households and offices to take practical steps to limit energy consumption.