Hamid Mollazadeh
As one of the pillars of Iran’s transport and agricultural sectors, diesel remains both indispensable and increasingly problematic. While policymakers often warn about the financial burden of subsidized gasoline, industry data show that diesel is the nation’s true pressure point—a quiet crisis with far-reaching consequences for the economy, the environment and national energy security.
Diesel consumption in Iran has climbed steadily over the past decade, driven by structural dependence on road freight, outdated agricultural machinery and the absence of large-scale rail and logistics reform.
Estimates from energy officials show that well over 120 million liters of diesel are produced and consumed daily, with freight transport alone accounting for more than 70 percent of the demand. Iran’s agricultural sector—reliant on old, inefficient tractors and irrigation pumps—adds another significant share, especially during peak farming seasons when consumption spikes.
This heavy reliance would be manageable if matched by efficient use, but the country’s diesel consumption intensity is among the highest in the region. According to internal government assessments, diesel waste per vehicle can be 40 percent higher than global averages, a gap driven by aging engines, poor maintenance, traffic congestion and the lack of modern emission control systems.
Key Challenge
But the most striking challenge is not consumption—it is losses. Diesel losses are substantially larger than gasoline, mainly due to a wider price gap with neighboring countries.
While gasoline is heavily subsidized (less than 3 cents per liter), diesel is even cheaper (less than 1 cent) in relative terms, creating enormous smuggling incentives. In border provinces like Sistan-Baluchestan, Kurdestan and Khuzestan, diesel can fetch 10 to 20 times its domestic value just across the border. This has fueled a thriving smuggling economy that drains national resources and undermines energy management plans.
Authorities estimate that millions of liters of diesel leave the country illegally each day, often through informal tanker trucks, modified fuel tanks and small mobile storage units.
Smuggling routes extend toward Pakistan, Afghanistan, Iraqi Kurdistan and even maritime channels in the Persian Gulf. Efforts to tighten border control—including Radio Frequency Identification (RFID) fuel cards, a technology used to identify and track objects wirelessly using radio waves, satellite tracking for heavy vehicles and monitoring stations—have had mixed success, largely because smuggling networks adapt faster than regulatory systems.
Environmental Toll
The environmental toll adds another dimension to Iran’s diesel dilemma. Diesel engines release high concentrations of particulate matter (PM2.5 and PM10), nitrogen oxides and unburned hydrocarbons.
In major cities such as Tehran, Karaj and Ahvaz, diesel trucks and buses are estimated to account for up to 60 percent of particulate pollution from mobile sources.
Iran’s aging fleet of public and freight vehicles, many decades old, amplifies the problem, pushing air quality indices into hazardous zones during colder months when atmospheric inversion traps pollutants near the surface.
Experts argue that Iran’s diesel challenge cannot be resolved without deep structural reforms. These include modernizing the freight fleet, expanding rail transport, introducing stricter vehicle inspection regimes and replacing outdated agricultural machinery with high-efficiency, lower-emission alternatives.
The government is also considering targeted subsidy reforms, digital fuel distribution systems and incentives for hybrid and CNG-powered heavy vehicles.
But time is pressing. With rising demand, growing smuggling and widening economic losses, diesel has become the silent crisis of Iran’s energy landscape—a fuel that keeps the economy running while steadily eroding the very budget meant to sustain it.
