Iran introduces new gasoline price tier
Iran has introduced a new gasoline pricing system, the first major change since 2019, in an effort to control rising costs and manage the country’s struggling economy. The government added a third price level to its long-standing subsidized fuel program, which still keeps gas among the cheapest in the world.
Under the new system, drivers can continue to buy the first 60 liters of gasoline per month at the heavily subsidized rate of 15,000 rials per liter, or about 1.25 US cents. The next 100 liters remain at 30,000 rials per liter, roughly 2.5 cents. Any fuel purchased beyond that falls under the new tier of 50,000 rials per liter, or about 4 cents.
Iran has long provided cheap fuel to citizens, but the cost of production and subsidies has strained the national budget. The Paris-based International Energy Agency reported that Iran paid $52 billion in energy subsidies in 2022, second only to Russia. Experts say the subsidies have also contributed to inflation and budget deficits over the years.
The 2019 fuel price hike, which increased subsidized gasoline by 50% and prices beyond quota by 300%, triggered nationwide protests. Security forces reportedly killed at least 321 people and thousands were detained during the unrest. Since then, the government has been cautious about increasing prices to avoid public anger.
Despite the small rise, many Iranians see the adjustment as necessary. Hamid Rezapour, a bank teller, said the government “needs more money to pay for public needs” and described the new pricing as an indirect tax. Taxi driver Mohammad Reza Assadi said the public has protested price increases in the past, but those protests often end in disappointment.
Iran’s gasoline demand remains high, with more than 25 million vehicles in the country, including over 6 million motorbikes. Around 8 million people work as taxi drivers on online platforms. Officials say the new pricing is a first step toward moderating fuel consumption and planning for future economic adjustments.
Oil Minister Mohsen Paknejad said the government will review gasoline prices every three months, suggesting the possibility of further adjustments in the future. Meanwhile, drivers at gas stations in Tehran appeared calm, with no major disruptions observed on the first day of the new pricing system.
The government hopes this change will reduce the fiscal burden, gradually manage inflation, and allow better planning for public services while keeping gasoline affordable for ordinary citizens.
