Iran increases gasoline price for its heaviest consumers as economy struggles

On Tuesday morning, Iran announced an increase in gasoline prices for its heaviest consumers, according to state media. This is the second price hike since December, part of ongoing economic challenges stemming from recent conflict. The move could exacerbate inflation, a concern that has previously led to nationwide unrest. In 2019, a similar price increase sparked widespread protests and a harsh crackdown, during which over 300 individuals reportedly lost their lives.

While Iran does not explicitly reference the ongoing U.S.-Iranian war, the government cited the "current situation" as the reason for the price hike. The additional revenue from the increase will be distributed to households.

Under the revised system, those who purchase more than 110 liters (29 gallons) of gasoline per month will now pay 100,000 rials (about 7 cents) per liter, effectively doubling the price they've paid since December. Iran maintains some of the world's lowest gasoline prices, but the increase further strains the daily lives of the nation's nearly 90 million inhabitants.

The local currency has been plummeting to unprecedented lows, causing a sharp decline in purchasing power. On Monday, the U.S. dollar was exchanged for 2.22 million rials.

Keramat Veis Karami, CEO of the state oil distribution company, stated that the new gasoline rate will impact 15% of consumers. According to the official IRNA news agency, consumption hit a record high of 145 million liters (38 million gallons) per day in August, while domestic production capacity stands at 122 million liters per day.

The remaining supply is imported. Price adjustments can alleviate high consumption, a problem experts attribute to aging vehicles, limited spare parts, and insufficient public transportation infrastructure.