Gasoline smuggling from Iran raises questions about authorities’ role

Iran’s gasoline smuggling crisis has reached unprecedented levels, with new estimates suggesting that up to 50 million liters of fuel are being illegally exported from the country every day.

This volume of fuel being siphoned out has cast doubts over the Islamic Republic’s narrative, which for years has placed the blame for smuggling on small-scale operators along the country’s borders. Instead, recent revelations point to a systemic operation involving high-level complicity.

Economist Mousa Ghaninejad ignited this debate in October 2024 when he provided an updated figure for the amount of gasoline being smuggled from Iran. Drawing from official statistics, Ghaninejad estimated that of the 120 million liters distributed daily across the country, only 70 million liters are actually consumed domestically.

“The rest is smuggled out of the country,” Ghaninejad said, pinning the figure at roughly 50 million liters per day—an amount that dwarfs previous estimates of around 20 million liters.

Transporting such an enormous quantity of gasoline would be a logistical feat beyond the capacity of the small-time fuel carriers the Islamic Republic often claims are responsible.

Hossein Raghfar, an economist, in an interview with the Eghtesad 100 news outlet on Wednesday went ahead with official figure of 20 million liters, saying: “This volume of smuggling cannot be the work of small time smugglers in border regions. It is definitely done by government entities.”

These smugglers, who typically use 2,000 to 2,500-liter tanks mounted on Nissan Junior pickup trucks, would need a convoy of at least 20,000 fully loaded trucks to move 50 million liters of gasoline in a single day. If these 4-meter-long trucks were lined up end to end with a three-meter gap between them, the convoy would stretch over 140 kilometers, highlighting the implausibility of small-scale smugglers being solely responsible for this volume of fuel trafficking.

Even if one considers the lower-end estimate of 20 million liters, which has been consistently cited by insiders and the state media for years, a fleet of around 8,000 Nissan trucks would still be required to transport the fuel.

Larger tanker trucks, which can hold up to 40,000 liters, would still need to operate in significant numbers, requiring at least 500 tanker trucks to move 20 million liters and over 1,250 trucks to handle the 50 million-liter figure.

Systemic smuggling networks

Economic journalist Reza Gheibi explained that this volume of fuel smuggling is unlikely to be carried out by individuals or even small groups. "This huge volume of smuggling is for sure systematic, and we can find some signs of it as well,” Gheibi said. He pointed to cases in which underground gasoline pipelines have been discovered, particularly in southern provinces, and added that fuel is also being smuggled via small ships operating from ports controlled by the Islamic Revolutionary Guard Corps (IRGC).

“There is no monitoring over them, and they work totally clandestinely,” he added. “So, part of the expense of IRGC’s trans-border activities is made through the fuel smuggling.”

Gasoline in Iran is sold at a subsidized price of around two cents per liter, but the government is forced to buy millions of barrels of fuel at a price of nearly 60 to 70 cents per liter. Smugglers can then sell the fuel on the black market for as much as 40 cents per liter, creating a massive profit margin. For those behind the operations, this translates into millions of dollars of profit every day.

According to experts the sheer scale of the operations suggests the involvement of larger and more organized networks.

Smuggling networks within the system

The involvement of officials in fuel smuggling operations has become apparent over recent years, as investigations and arrests have revealed a network of corruption within government centers. In December 2022, Aref Akbari, the Public and Revolutionary Prosecutor of Hormozgan Province, southern Iran, announced the arrest of six rural mayors, three employees of the Ministry of Industry, and two members of the Engineering Organization on charges of collaborating with fuel smugglers. These individuals allegedly issued fraudulent certifications to heavy machinery owners, enabling them to receive subsidized fuel without actually operating the machinery.

In another high-profile case, the Public and Revolutionary Prosecutor of Iranshahr in Sistan and Baluchestan Province, Saeed Rashki, announced in May 2021 that the head of a local parliamentarian’s office had been arrested on fuel smuggling charges. Nearly all employees of the local oil company were also taken into custody, with only one or two individuals spared.

These cases provide a glimpse into the extent of officials’ involvement in fuel smuggling. In May 2023, Mohammad Jafari, Deputy Head of the Headquarters for Combating the Smuggling of Goods, stated: “We estimate that a total of 25% of the fuel allocated to power plants is being smuggled.” While Jafari’s comments did not specify which power plants or the type of fuel involved, they point to large-scale smuggling operations embedded in the country’s fuel distribution infrastructure.

Such reports have consistently pointed to the complicity of government employees, while there is little evidence to support the idea that small-scale fuel carriers are responsible for smuggling gasoline on this scale. Instead, the available data suggests that lower-level government workers, many of whom have direct access to fuel distribution networks, play a central role in diverting fuel from the official supply chain into the black market.

Involvement of armed forces

One of the concerns surrounding the gasoline smuggling crisis is the role of Iran’s armed forces, particularly the IRGC, in facilitating or even directly participating in the operations. The IRGC controls a significant portion of the country’s transportation networks and border crossings, which according to Gheibi, makes it difficult to imagine that such large volumes of fuel could be smuggled out of the country without the IRGC’s knowledge or involvement.

With an average of 35 million liters of gasoline being smuggled daily, the theft appears to be organized through a network of actors linked to supervisory bodies, with the IRGC controlling much of the oversight of both the transportation network and the borders, as suggested by economic expert Gheibi.