Iran International
Russia’s turn to imported gasoline after Ukrainian attacks damaged its refineries is adding demand to a tight Asian fuel market, creating a potential new complication for Iran as it struggles to cover a daily shortfall of about 30 million liters.
Iran currently produces about 105 million liters of gasoline a day while consuming approximately 135 million liters, according to Reza Sepahvand, a member of parliament’s energy committee. He said in May that wartime damage had reduced domestic production while fuel imports had also declined.
Before the US-led war that started on February 28, Iran covered part of its fuel deficit through imports and barter arrangements, particularly with traders in the United Arab Emirates.
Those regular seaborne channels have been largely cut off by the ongoing US naval blockade, which bars maritime traffic entering or leaving Iranian ports. Tehran has diverted some trade through Oman’s Khasab port and Iraq’s Umm Qasr, but trade sources say those indirect routes are slower, more expensive and have far less capacity than conventional shipping, making them ill-suited to replacing large fuel deliveries.
The disruption has left Iran more dependent on a narrower pool of non-Western suppliers and alternative trading networks. That pool is now facing additional demand from Russia, which has turned to gasoline imports after Ukrainian drone strikes damaged its refining sector and disrupted domestic supplies.
Reuters reported that Russia was seeking as much as 400,000 metric tons of gasoline a month from countries including India, Belarus and Kazakhstan. At least 60,000 tons had been shipped from India to Russia by early July.
Where Russian and Iranian demand overlaps
Not all those purchases directly compete with Iran. Fuel from Belarus and Kazakhstan largely reaches Russia through established regional and overland networks that Tehran does not normally use.
The more relevant overlap is in India and the wider seaborne fuel market, where Russian purchases could increase competition for available cargoes, tankers, insurance and financial intermediaries.
Miad Maleki, a senior fellow at the Foundation for Defense of Democracies and a former senior sanctions strategist at the US Treasury, told Iran International that Russia and Iran were increasingly looking to overlapping parts of the non-Western energy market.
“Both countries are now drawing from the same pool of non-Western refiners with spare export capacity, but Russia is a far bigger buyer,” Maleki said.
India has sharply increased its exports of gasoline and other refined fuels in response to international shortages. Its exports of light and middle distillates were expected to reach 1.55 million barrels per day in July, almost double the 866,000 barrels per day recorded in May, Reuters reported, citing data from the commodities intelligence firm Kpler.
But the additional Indian supply has not fully relieved pressure on the Asian market. Kpler estimated that Asian imports of light and middle distillates would reach 5.8 million barrels per day in July, about 18% below levels seen before the latest conflict-related disruptions.
The Financial Times reported that a 42,000-ton gasoline cargo originating at India’s Vadinar refinery was scheduled to arrive at a Russian terminal. More than 90% of the crude processed at Vadinar this year had come from Russia, according to Kpler, effectively allowing Russian oil to be refined in India and shipped back as gasoline.
For Iran, the concern is not that Russia has already taken cargoes intended for Tehran. There is no public evidence that Moscow has directly displaced a specific Iranian purchase.
Rather, Russia is adding substantial demand to a market in which Iran already faces limited suppliers, restricted banking access and higher transportation and insurance costs.
Why Tehran has fewer options
Iran’s reliance on imported fuel had been increasing even before the war. A confidential Oil Ministry report obtained by Iran International showed that the country imported nearly 5 billion liters of gasoline and diesel combined in the Iranian year ending in March 2025, twice the volume recorded a year earlier.
The figure covers both gasoline and diesel and does not establish the volume of gasoline imports alone. But it illustrates Iran’s growing dependence on foreign fuel as domestic consumption outpaces refinery production.
The report said Iran had increasingly relied on barter arrangements because sanctions restricted its access to international banking and conventional payment systems. Tehran exchanged fuel oil for gasoline and diesel, particularly through traders operating in the United Arab Emirates.
Russia’s greater purchasing power and established commercial relationships could give it an advantage where the two countries’ needs overlap.
“Russia’s economy and import bill dwarf Iran’s, giving it far more purchasing power and better logistics networks with India, Kazakhstan and Belarus,” Maleki said.
Any resulting pressure inside Iran would probably not appear first through an official increase in gasoline prices. Fuel is heavily subsidized, and the government has historically been reluctant to raise prices because of the risk of public anger.
Instead, a prolonged shortage could lead to tighter quotas, uneven distribution, longer lines at filling stations and greater reliance on unofficial markets.
Drivers in several parts of Iran were already reporting tighter rationing, long queues and gasoline being sold outside the official distribution system at sharply higher prices in May, according to Iran International.
Russia’s gasoline imports do not mean Iran will lose access to foreign fuel. But they introduce another large buyer into parts of the market Tehran relies on at a time when Iran is already struggling with damaged production capacity, rising consumption and restricted access to international trade.
"The country will certainly face significant unrest among workers by the end of the summer if the current trend continues," Akbar Shokat, executive secretary of the Workers' House in Qom province, told the ILNA news agency.
Many workers, according to ILNA, who were temporarily laid off during the conflict and turned to jobs such as ride-hailing to make ends meet have since been recalled to factories, only to find that wages for June and July remain unpaid. Having returned to work, they are also no longer eligible for unemployment benefits.
Most Iranian workers, Shokat said, already live below the poverty line after years of wage suppression, leaving them with little capacity to absorb further economic pressure.
Employers accused of withholding wages
Shokat accused some employers of exploiting the current economic conditions by reducing production and delaying wage payments despite having sufficient raw materials and finished goods in storage.
"Some employers are taking advantage of the current situation," he said, adding that businesses which accumulated wealth over previous decades had a moral responsibility not to shift the burden of the crisis onto workers.
He urged the government to introduce emergency economic measures, including customs exemptions for imported raw materials and bank financing for manufacturers, to help companies continue operations and prevent further wage delays.
Shokat also called for legal action against employers who withhold workers' wages while stockpiling goods.
Strikes spread across sectors
ILNA has reported a growing number of labor protests in recent weeks.
On June 23, the agency reported that 1,600 workers at Tabriz Machinery Group stopped work after two months without pay, demanding payment of wages owed for May and June.
Earlier, healthcare workers in Islam-Abad-e Gharb of Kermanshah province gathered to protest low wages, delayed payments and worsening living conditions, criticizing what they described as unequal pay across Iran's health system and incomes that remain well below the poverty line.
Economic pressures deepen
The labor concerns come as Iran's economy faces mounting pressure following the conflict with the United States. The rial has weakened sharply against foreign currencies in the open market, with the US dollar trading above 1.91 million rials.
Separately, Saeed Shojaei, deputy planning minister at the Ministry of Industry, Mine and Trade, told the Ettelaat newspaper on July 15 that financial losses from electricity shortages affecting industry are expected to increase from about 3,030 trillion rials in the 2024 to 4,730 trillion rials in 2025.
Shojaei warned that if current conditions persist, unemployment could increase during the second half of the year.
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