Esmail Saghab Esfahani, a vice president who heads the state energy efficiency agency, acknowledged this week that “we really have a supply problem.” He told Iranians they could no longer count on fuel stations to cover their needs and should save part of their monthly ration before traveling.
“All the gasoline the government has, it has given to the people,” he said. “Nothing has been held back to supply more.”
On Thursday night, residents of Bandar Abbas, the main port on the Persian Gulf, blocked a road near a fuel station in the city’s Rajaei district with their cars, protesting long lines and empty pumps. Drivers on the Minab–Bandar Abbas route had protested earlier over the lack of fuel.
The economic argument for higher prices is straightforward. Fuel is inexpensive domestically and costly abroad, making it profitable to move illegally. Narrowing that gap could reduce the incentive to smuggle.
But the price difference alone does not explain how large volumes leave a state-controlled distribution system, who obtains them or why enforcement so often focuses on those transporting the fuel. Nor should gasoline shortages and diesel diversion be treated as interchangeable problems.
Where fuel leaves the system
Journalist Yashar Soltani, in a recent interview, alleges that approximately 30 million liters of fuel are smuggled out of Iran daily with assistance from people within state institutions. That would represent roughly 11 billion liters annually. His estimates and allegations of official involvement have not been independently verified.
The allegations nevertheless raise a question that deserves investigation. Transporting millions of liters requires more than individual drivers willing to cross a border. It requires access to supplies, storage, vehicles, financing and buyers. The people carrying the fuel are visible; those deciding where it comes from and who receives the proceeds may be much harder to identify.
Soltani’s November 2024 investigation into a southern Iranian smuggling case described the alleged use of forged delivery documents, reused permits and payments to secure passage through checkpoints. If those mechanisms operate as described, the decisive breach occurs before the border, when fuel is released or diverted under false pretenses.
Higher prices could affect the profitability of that trade. They would not, by themselves, repair the controls that allowed the diversion.
The Razzaq scheme requires particular care. It is reportedly an authorized fuel allocation program intended to support border communities. Its existence does not establish that every shipment made through it is illegal. Equally, official authorization does not remove the need to examine who controls allocations, how transactions are recorded and how much income reaches households.
Conflating authorized trade with smuggling would make reform less credible. Authorities should distinguish legal exports, administrative discrepancies and proven diversion, then publish comparable figures. Otherwise, seizure statistics and alarming estimates can obscure the basic question of where public resources go.
Who would pay more?
The incentive created by price differences is substantial. In December 2025, Financial Tribune reported diesel selling domestically for around 300 tomans per liter while fetching nearly 50,000 tomans across the border. These were reported prices at that time, rather than current quotations, but they illustrate the potential margins.
The effect of a price increase depends on its size, currency movements, operating costs and how traders obtain supplies. Someone buying fuel lawfully faces a different calculation from an organizer acquiring it through a fraudulent allocation or an unrecorded transfer.
Small increases may leave lucrative margins intact. Larger increases could reduce them, but would also raise costs for legitimate freight operators and farmers, with consequences for household budgets. A subsequent fall in the rial could widen the international price gap again.
The distinction between fuels is equally important. Evidence of large-scale diesel diversion does not, on its own, establish that higher gasoline prices for motorists would address it. Officials should explain which fuel is disappearing, where losses occur and how each proposed adjustment would tackle that specific problem.
The distinction between participants matters, too. A household carrying fuel because other income is scarce does not exercise the same control as someone managing bulk supplies, financing and distribution. Enforcement should examine responsibility and financial benefit rather than assume that the easiest person to arrest is the most consequential.
Removing a driver’s livelihood may leave an organizer able to recruit somebody else. It can also deepen local dependence on whoever controls access to work. Alternative employment should therefore be part of enforcement policy, rather than postponed until restrictions have made families poorer.
Iran’s earlier subsidy reform provides a practical lesson. An IMF working paper on the 2010 reform describes compensatory payments deposited before higher prices took effect. That experience does not establish a lasting solution to smuggling, but it shows that household protection can be prepared before costs rise.
Following the fuel and the money
Soltani’s allegations of official involvement need independent investigation. Authorities should trace fuel from refineries and depots to its intended customers, comparing deliveries with quotas and transport records. When fuel goes missing, investigators should examine who approved its release, who received it and who benefited.
Tracking devices are useful only if someone acts on the evidence. They cannot prevent diversion on their own if records are altered or officials facilitate it. Any investigation must also be able to scrutinize politically connected operators.
Authorized border programs should make clear what households are entitled to receive, account for the money paid to them and provide a way to challenge unfair deductions. Families need realistic alternatives, including access to legal trade, support for local businesses and training that leads to paid work.
Higher prices can help narrow the margins that make smuggling profitable. But if the opaque allocations and protection arrangements described in these reports persist, households and legitimate businesses could face higher costs while those controlling diverted supplies continue to profit.
The test of reform is therefore more demanding than whether it raises revenue or produces more arrests. It is whether less fuel disappears, investigations reach those organizing its diversion, and vulnerable households receive support before their costs rise. Without those changes, consumers could end up paying more without knowing whether the next station will have fuel.