Accessibility links

Breaking News

Rock-Bottom Fuel Prices Lead To Increased Smuggling

Iran -- A view of a petrochemical complex in Assaluyeh seaport on Persian Gulf coast, May 28, 2006
Iran -- A view of a petrochemical complex in Assaluyeh seaport on Persian Gulf coast, May 28, 2006

More than one billion liters (roughly 265,000 gallons) of gasoline have been smuggled out of Iran in the past few months, said Iran's anti-smuggling police chief IRGC Briadier-General Ali Moayyedi October 10.

The significant difference between the prices of fuel in Iran and in neighboring countries has lead to an uptick in gas smuggling across the border, where smugglers can sell Iranian gas for ten times what they can get at home.

Iran’s overall troubled economy, the dwindling value of the national currency, and reimposed U.S. sanctions have exacerbated the problem by driving down the value of gas inside the country and increasing the economic hardships Iranians face, causing some to turn to smuggling despite the risks.

Moayyedi described fuel smuggling as “organized crime” and said parts of the government are involved.

Although there has never been reliable data on the amount of fuel smuggled out of Iran to neighboring countries, estimates put the number in the region of 10 million liters (roughly 2,650 million gallons) per day.

To address the problem, some in government have suggested reinstating fuel rationing in the form of fuel cards.

Moayyaedi says the most effective tactic to stop the smuggling of gasoline and other refined oil products is to significantly raise the price. He says creating a “balance” between the prices of oil in and outside Iran will reduce the incentive to smuggle.

The difference between the price of fuel in the local and neighboring markets always encourages "opportunist elements" to carry out their illegal trade, Moayyedi said.

Deputy Speaker of Iran’s Parliament Masoud Pezeshkian has also maintained that the revival of fuel cards could control fuel consumption and reining the smugglers' activities.

However, the government has been hesitant to re-introduce rationed gasoline since it will likely intensify the already growing dissatisfaction with the government’s handling of the economy.

At 0.29 USD per liter, gas in Iran is currently the cheapest in the world after Venezuela.