Shifting from traditional supply-side policies to smart consumption management, the ministry's new approach focuses on controlling demand and optimizing use alongside increasing production capacity to bridge the gap between supply and demand.

Pricing policies: Gradual price reforms

The ministry has submitted proposals for gradual fuel price and subsidy adjustments to the relevant authorities for a macro-level decision. As the executive body, the ministry is preparing the operational frameworks for implementation.

In early 1404, jet fuel prices were adjusted upward by 30% relative to refinery gate prices. Furthermore, premium gasoline is now available for certain vehicles at a market rate through private suppliers.

For gas oil (diesel), measures were taken to adjust prices for major industries, mines, self-sufficient power plants and quota-exempt transportation. The related regulations have been approved by the cabinet.

Non-pricing policies: Modernizing a aging fleet

A key non-pricing initiative is modernizing Iran's transportation fleet. According to Ministry of Industry data, over 52% of the national vehicle fleet is outdated. The seventh national development plan targets scrapping 500,000 old vehicles annually.

To this end, the National Iranian Oil Refining and Distribution Company has reached agreements with stakeholders. The government’s commitment is estimated at $10 billion, to be financed through oil and gas savings bonds. The process for listing these bonds on the Energy Exchange is underway. This initiative is expected to significantly reduce fuel consumption and have positive environmental impacts.

Diversifying the fuel portfolio

A primary ministry goal is reducing dependence on gasoline, which currently comprises over 87% of the fuel portfolio. Plans include expanding the compressed natural gas (CNG) fleet, utilizing surplus liquefied petroleum gas (LPG) capacity and promoting electrification.

For CNG, the ministry settled $44 million in debt to contractors by issuing gas savings bonds. Over the past year, 8,000 vehicles were converted to dual-fuel in aftermarket workshops, and new contracts with automakers are underway for the factory production of 55,000 dual-fuel vehicles by year's end. Additionally, 14,000 aging CNG tanks over 15 years old – a major safety hazard – were replaced.

For LPG, the ministry is pursuing the finalization of standards for fueling stations and vehicles from the National Standards Organization, as well as finalizing station permits and pricing mechanisms.

In electrification, a program to replace 20,000 old gasoline motorcycles with electric models has begun in cooperation with the Environmental Protection Organization and the MAPNA Group. Developing charging infrastructure at existing fuel stations is also a priority.

Furthermore, the use of bioethanol as an octane booster and a substitute for MTBE has been implemented for the first time, a move that diversifies the fuel mix and reduces environmental impact.

Combating off-grid distribution, fuel smuggling

Fuel smuggling in Iran has evolved into a complex, organized network that wastes billions of tomans in national resources annually. To counter this, the ministry is implementing a series of structural and technological measures.

These include establishing standardized consumption patterns for industrial, agricultural, mining and power generation units to allocate fuel based on actual need; deploying new technology-based tools to monitor delivery and consumption; implementing a smart system to monitor and measure the petroleum supply chain; and restructuring the architecture of the national smart fuel system.

Digital monitoring: A transformation in transparency

The National Iranian Oil Refining and Distribution Company, in collaboration with several domestic engineering and telecom firms, has launched a project for the real-time monitoring of the petroleum supply and distribution chain. Using modern technology and artificial intelligence, this project addresses traditional challenges like smuggling, product leakage and weaknesses in field control.

The system registers and controls driver, route and electronic shipping documents online, allocating fuel quotas only to active fleets. This increases transparency and prevents the issuance of fake waybills and potential abuses.

Diesel consumption drops by 5m liters daily

Measures to update allocation patterns have already yielded results. These include identifying and canceling over 66,000 permits for non-local urban vehicles active in smuggling, revoking over 2,000 fuel cards in smuggling-prone regions, and cracking down on companies issuing fake shipping documents.

As a result, from the start of the Iranian year (March 21) through July, average daily gas oil (diesel) consumption has fallen by 5 million liters compared to the same period last year.

The 14th government's programs represent a blend of economic policy, infrastructure modernization and adoption of new technology. Executing these policies, alongside increased production, is intended to steer the country's fuel distribution system toward greater efficiency, equity and sustainability.

While short-term crackdowns are part of the effort, a sustainable solution depends on transparent processes, gradual price reform and the development of technological infrastructure. These combined actions demonstrate the government's serious intent to manage national energy consumption in a smart, sustainable and environmentally conscious manner.