Iranian Oil Minister Mohsen Paknejad Resigns Amid Fuel Shortages and Export Pressures

Iranian Oil Minister Mohsen Paknejad has stepped down from his position, with Hamid Bovard, the chief executive of the state-run National Iranian Oil Company, stepping in as acting minister. Officials reported that Mr Paknejad, who assumed the role in August 2024, submitted his resignation due to 'personal reasons' and strongly insisted on leaving.

The office of President Masoud Pezeshkian announced on Sunday that the resignation was accepted, with the ministry's Shana news service confirming the appointment of Mr Bovard as his successor.

Mr Bovard, 62, has directed the NIOC since 2024 and previously managed both the National Iranian South Oil Company and the Iranian Offshore Oil Company. He will temporarily lead the ministry while the government evaluates candidates for a permanent replacement.

Mr Bovard assumes leadership as Iran's energy sector faces severe strain from a US naval blockade, which the country's central bank chief noted has caused exports to drop to zero. This leadership transition follows a government decision less than a month ago to raise petrol prices for motorists exceeding their monthly subsidized limits. Effective September 7, petrol usage surpassing the 110-litre quota was set at 100,000 rials per litre, doubling the previous cost. The administration stated this step was necessary to tackle a daily petrol deficit of approximately 10 million litres.

Iran maintains subsidies for the initial 110 litres purchased monthly, offering 60 litres at 15,000 rials per litre and an additional 50 litres at 30,000 rials per litre. The increased third-tier rate affects consumption beyond these thresholds. These pricing adjustments followed widespread shortages and long queues at petrol stations as the nation grapples to match domestic consumption with available supplies. Surging fuel consumption has outpaced domestic refining capacity, heightening the country's dependence on imports.

These domestic fuel challenges coincide with major disruptions to Iran's international oil exports. Conflict with the US and restrictions on Iranian shipping have severely limited the nation's capacity to transport crude across the region and secure oil revenue. Prior to his departure, Mr Paknejad maintained that revenue from previously sold oil was still finding its way to Iran. Additionally, he reported in August that infrastructure damage resulting from the war had caused Iran to lose about 95 million cubic metres of gas production.