Engagement with Syria, eventually possibly leading to legitimate oil exports with the West (more than now, and particularly with the US… long in the future) would undercut the black market re-importation of oil smuggled out mostly through Syria, refined … somewhere, and smuggled back into Iran at a huge markup. If one could undercut the value of exporting to Iran over market price by allowing a greater volume of legitimate exports from Syrian black market Iran oil to the West, then the price of gas in Iran would rise even more requiring more Iranian subsidies or cuts in demand.

I read an article on this at most two years ago, I might be able to find it again. But building up refinement capacity is no doubt a response to the lack of total control that Iran has over its refined oil market because of its lack of refinement. Oil can’t go directly to cars, and that is one way to force the issue into every day lives either by forcing increased subsidies (and thus taxes) or prices. The gas riots on the rationing system are telling about how much the government should probably attempt to maintain the status quo (many other governments – as Egypt – peg gas in a similar system – to the detriment of government revenues, taxes, and thus overall welfare).