Since the 1980s, the emergence of regulatory literature within network industries, particularly the energy sector, has introduced a distinct "regulatory" level alongside traditional policy-making and service provision functions. Following the enactment of the Law for the Implementation of the General Policies of Article 44 of the Constitution of the Islamic Republic of Iran, specifically Article 59 pertaining to sectoral regulatory bodies, a framework for regulatory agencies was established within Iran's legal structure. This paper employs an analytical-descriptive methodology, utilizing document analysis, particularly legislation related to the oil and gas industry, to investigate the role of regulation within this sector. The study explores the challenges encountered in establishing an effective regulatory framework and subsequently proposes a policy solution. Findings indicate that, despite efforts to separate policy-making and regulatory functions from service provision following the Islamic Revolution, the Ministry of Petroleum continues to retain significant authority over both domains. Attempts to establish an independent regulatory body within the oil and gas industry have thus far been unsuccessful. Key challenges identified include: (a) insufficient attention to the gradual process of regulatory institution formation within the Iranian context; (b) the absence of a clear mechanism for transitioning regulatory responsibilities from the ministry to independent agencies; and (c) the creation of regulatory bodies within the energy sector without concomitant amendments to fundamental legislation. To address these challenges, this research proposes the initial establishment of an advisory regulatory institution as a crucial first step.