Iran doubles unsubsidized gas prices

The Iranian government has announced a steep increase in fuel prices it does not subsidize amid the severe economic crisis gripping the country since the start of the war.

As of Tuesday, the cost of a litre of petrol on the open market will double from 50,000 rials ($0.36) to 100,000 rials, Keramat Weys-Karami, chairman of the state-owned Petroleum Products Distribution Company, said on state television.

However, the prices for subsidized petrol will remain unchanged, he said.

Fuel in Iran is among the cheapest in the world. Iranians fill up their tanks for the first 110 litres using a fuel subsidy card for just over $0.01 per litre.

Once this allowance is used up, the non-subsidized price applies. This will now be 100,000 rials per litre or about $0.07, which is minuscule compared to what drivers in Europe and the United States pay.

Despite the low values by western standards, this has far-reaching consequences in Iran, given its significantly lower incomes, affecting transportation costs, energy prices and inflation.

At the end of August, fears of supply shortages led to long lines at filling stations. In the metropolis of Tehran, with its millions of inhabitants, drivers even waited in front of stations in the middle of the night.

The government acknowledged problems resulting from the war that the US and Israel launched against the country at the end of February. President Massoud Pezeshkian called on his government and the population to practice austerity.

Fuel price increase triggered protests in 2019

During the heaviest US-Israeli attacks in March and early April, energy facilities in Iran, including parts of the oil and gas industry and fuel depots, were also bombed. According to government figures, some of the damaged infrastructure has been repaired.

Meanwhile, the US Navy has imposed a naval blockade on Iranian ports to prevent the country from exporting oil, its main source of income.

In the past, there had been repeated debates about possible price increases to curb consumption. In 2019, a fuel price hike triggered nationwide protests, primarily driven by the working class.

The state violently suppressed the demonstrations, resulting in the deaths of several hundred people. These events became known as “Bloody November.”