Iran’s Diesel Demand Down Amid Better Checks On Smuggling

Head of the Iranian Oil Ministry’s oil products company (NIORDC) said on Tuesday that demand for diesel had dropped by more than 6% year on year in the four months to July 22.

Mohammad Sadegh Azimifar said demand for diesel fuel, which is mostly used in Iran’s transportation and agricultural sectors, had reached an average of 81 million liters per day in April-July, down from 86 million liters per day reported over the same period last year.

Azimifar said the fall in demand has allowed the NIORDC to boost its reserves and to earmark more gasoil supplies to Iranian power plants.

He said the government had expected a 5% increase in demand for diesel fuel this calendar year, adding, however, that it fell mainly due to new technological systems used to monitor and control consumption, both on the roads and in agricultural units.

Iran has introduced strict controls on the delivery of diesel fuel to motorists and farmers in recent months as part of efforts to reduce smuggling across the borders.

Previous government estimates had suggested that nearly 30 million liters per day of gasoline and diesel were smuggled to neighboring countries where prices are sometimes 100 times higher than rates charged inside Iran.

Iran has the cheapest fuel prices in the world, with a two-tier pricing system for diesel that does not currently exceed 6,000 rials ($0.068) per liter.

Iran’s Central Headquarters for Combating Goods and Currency Smuggling said in May that fuel smuggling was inflicting an annual loss of approximately $4 billion on the country.