Oil Industry Challenges and Import Dependence Strain Edible Oil Producers

The oil industry in Iran faces numerous challenges in the areas of raw material supply, government policy, and imports. One of the most important of these challenges is the heavy dependence on oilseed imports, which constitute about 90% of the raw materials for domestic industries.

This dependence has made producers extremely vulnerable to global market fluctuations, exchange rate changes, and banking restrictions.

In addition, the government’s mandatory pricing of final products, without considering the actual costs of production, has created economic pressure on producers and reduced their profit margins to a dangerous level. Also, variable and sometimes unclear tariffs for importing grains and crude oil have made the decision-making and investment environment unclear for industry players.

In the area of government macro policies towards the oil industry, at first glance, these policies are set with the slogan of supporting national production and consumers, but in reality, in many cases they create serious obstacles for producers. One obvious example is the frequent changes in foreign exchange and import policies, which have caused instability in the supply chain and reduced long-term planning power for production units.

In addition, some policies, such as providing preferential currency for oil imports instead of grains, have in practice benefited importers and harmed domestic producers, hindering the growth of domestic capacities.