Iran increases gasoline price for its heaviest consumers as economy struggles

Tehran, Iran (AP) — Iran raised the price of gasoline for its heaviest consumers on Tuesday, according to state media, amid the economic strain caused by ongoing conflict. This is the second such increase since December. The new rates are part of a cycle of economic challenges facing the country.

The government's announcement pointed to the "current situation" and noted that the additional revenue will be given to households. Under the revised system, individuals consuming more than 110 liters (29 gallons) of gasoline per month will now pay 100,000 rials (about 7 cents) per liter, effectively doubling the rate since December.

While Iran still boasts relatively low gasoline prices globally, the increase adds to the daily hardships of the nation's 90 million citizens. The local currency has been plummeting to record lows, and purchasing power has significantly eroded. As of Monday, one U.S. dollar was trading at 2.22 million rials.

Keramat Veis Karami, CEO of the state oil distribution company, stated that the new gasoline rate would impact 15% of consumers. Consumption reportedly reached a record high of 145 million liters (38 million gallons) daily in August, while domestic production stood at 122 million liters per day. The remainder is imported.

Raising gasoline prices could help curb consumption, which experts attribute to aging vehicles, limited spare parts, and inadequate public transportation in Iran. However, they also warn that higher gasoline prices will contribute to inflation in a nation already grappling with an annual inflation rate of around 67%, as reported by the country's statistics center.