Iran faces fuel imbalance amid low CNG use and high gasoline consumption

Iran is facing a significant fuel imbalance driven by high gasoline consumption, which is projected to reach 140 million liters per day. Key contributors to this crisis include the production of fuel-inefficient domestic and Chinese-assembled vehicles, an aging transport fleet, widespread fuel smuggling, and insufficient use of alternative energy sources like CNG and LPG.

Despite having one of the world's largest compressed natural gas (CNG) infrastructures, over 60 percent of the country's CNG capacity remains unused. Currently, only 16 million cubic meters of the 40 million cubic meter daily capacity is utilized. Experts attribute this underutilization to the narrowing price gap between gasoline and CNG, which reduces the economic incentive for drivers to switch.

Furthermore, domestic automakers have failed to meet legal mandates to ensure a 30 percent share of dual-fuel vehicles in production, with the actual share dropping below 5 percent. This shift has resulted in a new vehicle fleet that is almost entirely dependent on gasoline. While the Middle East is seeing a surge in electric vehicle sales—led by Turkey, the UAE, and Saudi Arabia—Iran's transition toward hybrid and electric manufacturing remains slow.