Report Uncovers $1 Billion Annual Fuel Smuggling from Iran to Pakistan

Iranian traders are smuggling more than $1 billion worth of fuel into neighboring Pakistan annually.

According to a Pakistani intelligence report spanning 44 pages, "Smuggling of Iranian Oil," sheds light on a long-standing illegal trade that escalated following US-imposed sanctions on Iranian oil exports a decade ago.

The sanctions pushed Tehran to seek alternative markets, significantly boosting the smuggling operations across the 900-kilometer Iran-Pakistan border.

The report reveals that last year alone, approximately $1.02 billion worth of Iranian petrol and diesel was illegally transported into Pakistan, making up about 14% of Pakistan’s annual fuel consumption.

The smuggling has led to significant financial losses for the Pakistani exchequer, estimated at around $820 million in lost taxes and duties, and has negatively impacted local petroleum businesses.

Daily, around 2,000 vehicles are involved in smuggling barrels of fuel across the border, a practice that has continued despite heightened military tensions between Iran and Pakistan, including reciprocal strikes earlier this year.

The socioeconomic implications of potentially halting the trade are profound, especially for the residents of Balochistan, Pakistan's poorest region, which has been plagued by a violent separatist insurgency.

The report indicates that nearly 2.4 million people in Balochistan depend on this illicit trade for their livelihood, with few other economic opportunities available.

Moreover, the report, leaked to local media, names over 200 individuals involved in the smuggling operations, including government and security officials, highlighting widespread corruption and collusion at border checkpoints.

"The culture of bribes and connivance of [security] officials with smugglers continues at almost all [border checkpoints]," it said.

An official, speaking on condition of anonymity, hinted that the leak of the report might be a strategic move by the government to justify an upcoming crackdown on the smuggling operations. However, skepticism remains about Islamabad's commitment to fully addressing the issue, given past inconsistencies in enforcement efforts.

The scarcity of job opportunities and governmental neglect in the impoverished Sistan-Baluchestan province of Iran are significant factors driving Baluch citizens to engage in fuel smuggling. For many in the border area, selling fuel to Pakistan has become a vital source of income, offering higher returns than the domestic market provides. This trade serves as one of the few available means for residents to earn a livelihood.

Every year, the shooting of fuel smugglers by Iranian military forces results in the deaths of hundreds. Reports indicate that from March 20 to March 30 alone, 27 fuel smugglers lost their lives due to actions by security forces, road accidents, and vehicle fires. The victims were predominantly young, aged between 18 and 28 years old.

In 2023, it was reported that at least 172 Baluch fuel smugglers died, with another 42 sustaining injuries.