Iran’s Fuel Crisis Deepens Amid U.S. Naval Blockade

On August 25, 2026, long lines formed at Tehran petrol stations as drivers rushed to fill tanks before reaching the imposed 20-litre per-car quota. The Energy Optimisation Organisation (EOO), the state body that manages fuel resources, reported a 15 million-litre shortfall against Iran’s daily demand of 135 million litres. The shortage follows a U.S. naval blockade that has been in effect since July 14, which has sharply limited Iran’s ability to import fuel and has been compounded by damage to domestic refining capacity from U.S. and Israeli air strikes.

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Iran, a major crude exporter, has long relied on imported gasoline to meet domestic needs. The war that began in February intensified after the United States and Israel launched a bombing campaign that damaged several Iranian refineries. In addition, the Ukraine conflict has constrained fuel imports from northern routes, while Russian refinery capacity has been reduced. The country’s subsidy system, which sells petrol at 15,000–50,000 rials per litre (far below market rates), has amplified demand and strained government finances.

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• U.S. Treasury Secretary Scott Bessent announced an expansion of secondary sanctions on Iran’s trading partners, describing the measures as part of a broader “economic warfare” strategy aimed at tightening the financial pressure on Tehran.

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• The Energy Optimisation Organisation warned that the current quota and pricing mechanism are “critical” and unsustainable given soaring inflation and supply disruptions.

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• President Masoud Pezeshkian argued that selling petrol at below-market prices forces the government to divert resources needed for food subsidies and worker support, questioning the logic of buying fuel at 1.3 million rials per litre and selling it for 15,000 rials.

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• Mohsen Haji-Mirzaei, head of the president’s office, indicated that the government plans to reduce fuel quotas but has not yet decided on a new pricing structure, noting uncertainties about the social, economic, and security impacts of any change.

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Iran’s currency has fallen to 2 million rials per dollar, while year-on-year inflation approaches 90 % and food inflation sits near 130 %. Energy analyst Morteza Behrouzifar warned that raising petrol prices could trigger severe social unrest, recalling the deadly protests sparked by a 2019 price hike. The government continues to tap strategic reserves and has paused a pilot price increase in Kerman province after public backlash. With limited import routes and ongoing sanctions, the fuel shortage is likely to persist, heightening economic strain and the risk of further domestic instability.

The Irish Times