Iran Increases Fuel Prices for Heavy Users as Economic Crisis Deepens
Iran introduced a higher price for its heaviest gasoline users early Tuesday, state media reported, marking the latest economic strain caused by months of ongoing war. It’s the second such price hike since December.
Gasoline price increases have historically been a sensitive issue in Iran, often contributing to broader inflation concerns. A similar increase in 2019 triggered nationwide protests followed by a crackdown that reportedly killed more than 300 people.
The government’s announcement did not directly reference the war with the United States, instead citing the “current situation,” while noting that additional revenue generated from the price increase would be redirected to households. Under the new system, individuals purchasing more than their monthly quota of 110 liters of gasoline must now pay 100,000 rials, roughly 7 cents, per liter — double the rate in place since December.
Iran continues to maintain some of the lowest gasoline prices in the world, but this latest increase adds further strain for many of the country’s more than 90 million residents. The national currency has already been falling to record lows, weakening overall purchasing power. On Monday, the US dollar traded at 2.22 million rials.
Keramat Veis Karami, CEO of the state oil distribution company, said Monday that the new pricing structure would affect roughly 15 percent of consumers, according to the official IRNA news agency. He noted that gasoline consumption reached a record high of 145 million liters per day in August, while domestic production capacity stood at only 122 million liters daily, with the remaining supply coming from imports.
Raising prices is intended to help curb high consumption levels, which experts have attributed to aging vehicles, limited spare parts availability, and insufficient public transportation infrastructure across the country. However, experts also caution that gasoline price increases will likely push inflation even higher in a country already grappling with an annual inflation rate of approximately 67 percent, according to Iran’s statistics center, a government agency.
Cheap gasoline has long been viewed as something close to a birthright in Iran, with price increases sparking mass demonstrations dating back to 1964, when the shah was forced to deploy military vehicles to replace striking taxi drivers following an earlier price hike.
An hour after the new pricing took effect, two of eight gas stations visited by The Associated Press had temporarily closed to regulate pump pricing, while the remaining six continued operating with lines of roughly a dozen cars each. Security around the filling stations was notably tight, with both uniformed and plainclothes police visible at the scene.
In line at one station, 34-year-old Tehran resident Asghar Rahimi said he doesn’t expect the price increases to stop here. “The tiny amount cannot help government to manage problems like poverty and unemployment,” Rahimi said. “This was the first step. In coming months, they need to raise it again.”
Another resident, 55-year-old Ali Salari, expressed concern that the fuel price hike would ripple into the cost of other essentials, including bread and meat. “It has been that way ever since government manipulated gas prices,” Salari said.
Hamid Mirzei, a 43-year-old Tehran resident, said food prices have already been climbing steadily, with a basic grocery trip for staples like beans and lentils sometimes costing up to 100 million rials, or about $73. “Life has become difficult for all of us. Even basic groceries are becoming unaffordable,” Mirzei said. “If gasoline prices go up as well, things will only get much worse.”
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