Despite possessing the world's fourth-largest proven oil reserves, Iran's petrochemical industry development has primarily relied on natural gas over the past two decades, with limited efforts devoted to completing the crude oil value chain. Petro-refineries have been proposed as a strategic solution for reducing crude oil exports and integrating refining and petrochemical processes; however, their development in Iran has experienced significant delays and stagnation. This study aims to identify the barriers to petro-refinery development using deductive thematic analysis within Ostrom’s framework. The study population consisted of researchers, experts, and managers in the energy and petrochemical sectors. Participants were selected through purposive sampling combined with the snowball technique. Data were collected through semi-structured interviews with nine experts and continued until theoretical saturation was achieved.The findings indicate that the primary cause of failure in petro-refinery development is institutional failure and the misalignment of rules governing the action arena. In terms of position rules, overlapping responsibilities and conflicting objectives among responsible organizations, coupled with the absence of an independent regulatory body, have led to poor coordination among relevant institutions. The inefficiency of boundary rules in screening and selecting investors has resulted in the accumulation of inactive projects. The results also reveal that government interventionist policies, weak mechanisms for collective action, an ineffective incentive system, macroeconomic instability, international sanctions, and limited access to advanced technologies have collectively created an inefficient institutional structure. These conditions have hindered the establishment of a stable action arena for petro-refinery development and the completion of Iran’s oil value chain.