Iran extends fuel rationing to cover diesel

The Telegraph

Although Iran possesses the third biggest oil reserves in the world, a lack of refining capacity compels the country to import much of its petrol and diesel. Sanctions imposed by the US, Britain and the European Union have made it increasingly hard to secure these supplies, forcing Iran to limit the petrol consumed by ordinary drivers.

These restrictions will also apply to diesel used by heavy goods vehicles.

"The government pays huge subsidies to the energy sector, which has led to the sinister phenomenon of smuggling of oil products," said Rostam Qasemi, the oil minister.

Because of government subsidies, diesel in Iran costs less than 10 pence per litre – cheaper than a bottle of water – allowing anyone to resell in a neighbouring country for a significant profit. Largely because of the effects of sanctions, the value of the Rial, the national currency, has collapsed this year, making diesel even cheaper in dollar terms and increasing the profits to be made by smuggling.

The new policy will limit the amount of diesel that Iranians can buy at the subsidised price. But ordinary Iranians regard cheap fuel as their birthright and the natural benefit of living in a country with an abundance of oil. Imposing these limits could damage the popularity of the regime, while the fact they are deemed necessary is further evidence of the impact of sanctions.

The International Atomic Energy Agency's next report on Iran's nuclear programme, due on Friday, is expected to reinforce the case for sanctions in the eyes of their Western proponents. The IAEA is expected to say that Iran has completed installing centrifuges inside the Fordow uranium enrichment plant, a highly sensitive plant dug into a mountainside.

This facility has space for 3,000 centrifuges, while the last IAEA report said that 2,140 were in place. If Fordow has been filled to capacity, however, not all of the machines may be operational. The number of working centrifuges in the plant has been stuck at 696 since February. Iran has suffered technical difficulties – which may have been worsened by deliberate sabotage – and its leadership may be treading more carefully to avoid precipitating a crisis.